Pooling two independent estimates
You have an estimate of a quantity with standard error . A colleague independently produces a second estimate of the same quantity, but with standard error . If you report the simple (equally weighted) average of the two, what is the standard error of that combined estimate? (to 2 decimals)
Show hints (2)+
- Work in variance, not SE: square to 0.36 and 0.64.
- A simple average has variance (1/4)(0.36 + 0.64) = 0.25; take the root.
Answer
Reveal answer →Final answer
0.5 (± 0.01)
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Asked at: Multi-Strategy Quant, Data-Driven Research