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Bias reduction in estimating quantile sensitivities

  • Tongji University
  • University of Maryland, College Park

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

In this paper, we introduce an Infinitesimal Perturbation Analysis (IPA) estimator with jackknifing to estimate quantile sensitivities, and theoretically prove the two-fold jackknife method reduces bias by eliminating the order 1/n bias in the original IPA estimator. Numerical examples in finance on portfolio return and options pricing are presented to illustrate the superiority of the new estimator over the original IPA estimator, especially for high and low quantile levels. Antithetic variates are used to further reduce the variance.

Original languageEnglish
Title of host publication19th IFAC World Congress IFAC 2014, Proceedings
EditorsEdward Boje, Xiaohua Xia
PublisherIFAC Secretariat
Pages10463-10468
Number of pages6
ISBN (Electronic)9783902823625
DOIs
StatePublished - 2014
Externally publishedYes
Event19th IFAC World Congress on International Federation of Automatic Control, IFAC 2014 - Cape Town, South Africa
Duration: 24 Aug 201429 Aug 2014

Publication series

NameIFAC Proceedings Volumes (IFAC-PapersOnline)
Volume19
ISSN (Print)1474-6670

Conference

Conference19th IFAC World Congress on International Federation of Automatic Control, IFAC 2014
Country/TerritorySouth Africa
CityCape Town
Period24/08/1429/08/14

Keywords

  • Discrete event modeling and simulation
  • Monte Carlo simulation
  • Perturbation analysis
  • Sensitivity analysis
  • Stochastic hybrid systems

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