Explain : The risk parameter, (theta) , is a real number for the normal/normal model but could be a more general quantity for EBCT Model 1. What does it imply, when it says that the risk parameter can be a more general quantity for EBCT model 1? Mathematically, more general quantity than a real number is a complex quantity. So, does it intends to say that the risk parameter under the EBCT model can be a complex number too!?
But, even for the normal/normal model which is a bayesian approach to credipbility premium formula, we assume a normal prior distribution for the risk parameter. So, even there it is a distribution rather than a particular value.
