Hi Can anyone explain the practical uses of Negative Binomial distribution Type I and II Thanks Viswanath
Consider a series of repeated, independent random experiments, such as throwing a dice or tossing a coin. Divide the outcomes into "success" and "failure", and assume we know the probability of each. Question: how many failures will we get if we keep going till we get a certain number of successes? That number is negative binomial distributed. This also explains why there are different forms of it - you might want to count "total trials to get k successes" or "total failures to get k successes". If you're counting all the trials do you count the k-th trial as well? And so on.
In CT6 we ignore it's derivation and just use the fact that Type II is a discrete random variable that takes values 0, 1, 2, ... and so it can be used to model the number of claims to a general insurer.
