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Confidence regions for high quantiles of a heavy tailed distribution

Liang Peng, Yongcheng Qi

math.STarXiv:math/0611278

Abstract

Estimating high quantiles plays an important role in the context of risk management. This involves extrapolation of an unknown distribution function. In this paper we propose three methods, namely, the normal approximation method, the likelihood ratio method and the data tilting method, to construct confidence regions for high quantiles of a heavy tailed distribution. A simulation study prefers the data tilting method.

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