Question: For each of the following 10 items, assess the 0.05 and 0.95 fractiles based only on your current knowledge. That is, choose upper and lower estimates such that you are 90% sure that the actual value falls between your estimates. Your challenge is to be neither too narrow (i.e., overconfident) nor too wide (underconfident).
If you have done a good job, most of your intervals contain the actual value (given in the online supplement at www.cengagebrain.com-no peeking!). If three or more of your intervals missed the actual value, though, you have demonstrated overconfidence. Given your results in this question, would you adjust your assessments in Problem?
Problem: Assess these fractiles for the following uncertain quantities: 0.05 fractile, 0.25 fractile (first quartile), 0.50 (median), 0.75 fractile (third quartile), and 0.95 fractile. Plot your assessments to create graphs of your subjective CDFs.
a. The closing Dow Jones industrial average (DJIA) on the last Friday of the current month.
b. The closing DJIA on the last Friday of next year.
c. The exchange rate, in Japanese yen per dollar, at the end of next Monday.
d. The official high temperature at O'Hare International Airport tomorrow.
e. The number of fatalities from airline accidents in the United States next year.
f. The number of casualties from nuclear power plant accidents in the United States over the next 10 years.
g. The value of the next jackpot won in the California state lottery.