Assessing risk for rare events

Yssa Dewoody, V. T. Gururaj and Clyde Martin

Journal of Applied Statistics, 1999, vol. 26, issue 6, 681-687

Abstract: This paper develops a method for assessing the risk for rare events based on the following scenario. There exists a large population with an unknown percentage p of defects. A sample of size N is drawn from the population and, in the sample, 0 defects are drawn. Given these data, we want to determine the probability that no more than n defects will be found in another random sample of N drawn from the population. Estimates on the range of p and n are calculated from a derived joint distribution which depends on p, n and N. Asymptotic risk results based on an infinite sample are then developed. It is shown that these results are applicable even with relatively small sample spaces.

Date: 1999
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DOI: 10.1080/02664769922124

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