Y
yeah_baby
Member
How do we know which of the two Negative Binomial distribtions to use?
In particular, I came across a problem using them for N in compound claim distributions. For example, Q&A Bank q2.13. When I attempted this question, I used the Type 1 Negative Binomial because it gave an expected number of claims of 4.44, which I intuitively felt was more reasonable than the expected number of claims under Type 2, which was 0.44 (I know that really there is no rational reason for this!)
Needless to say, the solution had used the Type 2 after all.
My question is: how do we know which one the examiners will be looking for - and will we be penalised for using the wrong type?
Presumably the same issue also applies to the Geometric (which is Negative Binomial with k=1)?
In particular, I came across a problem using them for N in compound claim distributions. For example, Q&A Bank q2.13. When I attempted this question, I used the Type 1 Negative Binomial because it gave an expected number of claims of 4.44, which I intuitively felt was more reasonable than the expected number of claims under Type 2, which was 0.44 (I know that really there is no rational reason for this!)
Needless to say, the solution had used the Type 2 after all.
My question is: how do we know which one the examiners will be looking for - and will we be penalised for using the wrong type?
Presumably the same issue also applies to the Geometric (which is Negative Binomial with k=1)?