The Cramér‐Rao lower bound on variance: Adam and Eve's “uncertainty principle”

Michael R. Powers

Journal of Risk Finance, 2006, vol. 7, issue 3, 233-236

Abstract: Purpose - The editorial aims to describe the importance of the Cramér‐Rao lower bound (CRLB) in matters of risk, and consider why this inequality generally receives less attention than it deserves. Design/methodology/approach - The CRLB is discussed in the context of other celebrated equations, one of which (Heisenberg's uncertainty principle) is actually implied by the CRLB. A hypothetical world with no randomness on the macroscopic level is then imagined, and the role of the CRLB in that world is considered. Findings - It is found that in a world with no macroscopic uncertainty, the CRLB would play a central role in describing the “counterintuitive” concept of randomness. Originality/value - The editorial identifies and explores an important epistemological result that is under‐appreciated.

Keywords: Variance; Risk assessment; Functional equations (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jrfpps:15265940610681637

DOI: 10.1108/15265940610681637

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