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The Cramér‐Rao lower bound on variance: Adam and Eve's “uncertainty principle”

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  • Michael R. Powers

Abstract

Purpose - The editorial aims to describe the importance of the Cramér‐Rao lower bound (CRLB) in matters of risk, and consider why this inequality generally receives less attention than it deserves. Design/methodology/approach - The CRLB is discussed in the context of other celebrated equations, one of which (Heisenberg's uncertainty principle) is actually implied by the CRLB. A hypothetical world with no randomness on the macroscopic level is then imagined, and the role of the CRLB in that world is considered. Findings - It is found that in a world with no macroscopic uncertainty, the CRLB would play a central role in describing the “counterintuitive” concept of randomness. Originality/value - The editorial identifies and explores an important epistemological result that is under‐appreciated.

Suggested Citation

  • Michael R. Powers, 2006. "The Cramér‐Rao lower bound on variance: Adam and Eve's “uncertainty principle”," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 7(3), pages 233-236, May.
    • Handle: RePEc:eme:jrfpps:15265940610681637
    DOI: 10.1108/15265940610681637
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