Take the 2-minute tour ×
MathOverflow is a question and answer site for professional mathematicians. It's 100% free, no registration required.

In the Buhlman-Straub credibility model I get a relatively small (in relation to the within group variance estimate) and negative between group variance estimate.

The reason for the estimate being negative (since it is by definition positive) is the correction term for unbiasedness.

In what way would my inference of the credibility factors be affected if using an alternative but biased estimate (the within variance estimate is still small but positive)?

For some groups I do have a lot of data and should hence be quite certain that the residuals for these groups are credible estimates of the underlying risk profile.

share|improve this question
    
You might get a better answer at stats.stackexchange.com –  Dan Petersen Sep 8 '12 at 13:13
    
Will do, thanks! –  user26311 Sep 8 '12 at 16:19
add comment

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Browse other questions tagged or ask your own question.