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Mind & EverydayMental model

Every decision under uncertainty has four possible outcomes.

Hit, miss, false alarm, correct rejection: signal detection theory, born from 1950s radar research, separates two things people conflate – how well you can tell signal from noise, and how cautious your threshold is. The two can be changed independently.

Useful: For any alarm system ask: what does a false alarm cost, and what does a miss cost?

Source: en.wikipedia.org

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