I have a somewhat related question—and openly admit to being a neophyte
my question is this
traditional variance weights positive and negative outcomes equally
how can one compute a variance that reflects a persons bias (risk aversion) toward a directional outcome
as in business assume an ill favored outcome is worth 0.5x and a preferred outcome is worth 1.5x
would a person compute 2 variances by creating 2 sub populations illfavored/preferred and apply the
formula var (bx) = b^2times sigma^2 to each population and sum the final products?
am I wrong in this line of thinking?
is there another approach?
its been quite some time since my university stats days—so please be gentle with my ignorance
appreciate your thoughts and if you ping my email to let me know
miroslodki (at) yahoo (dot) ca
btw—fascinating site and discussion regarding crowd wisdom—fwiw I share your viewpoints/concerns
you’ve found a new reader
cheers
Miro
I have a somewhat related question—and openly admit to being a neophyte
my question is this traditional variance weights positive and negative outcomes equally
how can one compute a variance that reflects a persons bias (risk aversion) toward a directional outcome as in business assume an ill favored outcome is worth 0.5x and a preferred outcome is worth 1.5x
would a person compute 2 variances by creating 2 sub populations illfavored/preferred and apply the formula var (bx) = b^2times sigma^2 to each population and sum the final products?
am I wrong in this line of thinking? is there another approach? its been quite some time since my university stats days—so please be gentle with my ignorance
appreciate your thoughts and if you ping my email to let me know miroslodki (at) yahoo (dot) ca
btw—fascinating site and discussion regarding crowd wisdom—fwiw I share your viewpoints/concerns you’ve found a new reader cheers Miro