A Statistical Model with Qualitative Input
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A statistical estimation model with qualitative input provides a mechanism to fuse human intuition in a form of qualitative information into a quantitative statistical model. We investigate statistical properties and devise a numerical computation method for a model subclass with a uniform correlation structure. We show that, within this subclass, qualitative information can be as objective as quantitative information. We also show that the correlation between each pair of variables controls the accuracy of the statistical estimate. An application to portfolio selection is discussed. The correlation, although compromising the accuracy of the statistical estimation, affects the performance of the portfolio in a minimal way.
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