On Decomposition and Aggregation Error in Estimation: Some Basic Principles and Examples

Ali Mosleh and Vicki Bier

Risk Analysis, 1992, vol. 12, issue 2, 203-214

Abstract: A common strategy in estimation is to decompose the quantity being estimated into several factors, estimate a value for each factor, and then reaggregate these values to obtain an overall estimate. Until now, the extent of decomposition to use has been considered largely a matter of judgment. However, both the extent of decomposition and the manner in which the results are reaggregated can have a significant effect on the resulting estimate. This paper discusses factors affecting the optimum level of decomposition, and presents examples showing that the use of nonoptimal decomposition strategies can lead to significant inaccuracies.

Date: 1992
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https://doi.org/10.1111/j.1539-6924.1992.tb00668.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:riskan:v:12:y:1992:i:2:p:203-214

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