Claim sizes are normally distributed with mean 0 and variance 1,000,000. The parameter 0 varies by risk class, and is normally distributed with mean 2,500 and variance 4,000,000. In a given risk class, the following claims are observed: 3,000 5,000 2,000 2,200 3,300 Determine the posterior expected claim size for this risk class. 

 

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To determine the posterior expected claim size for a given risk class we need to use Bayesian infere... View the full answer