142 – Miscellaneous Computational Methods
On a Mixture Pareto Distribution
Mei Ling Huang
Brock University
Justyne Mottola
Brock University
Percy Brill
University of Windsor
The Pareto distribution is a heavy tailed distribution with many applications. In this paper we consider a real world example with heavy tailed observations, which leads us to propose a mixture truncated Pareto distribution (MTPD) and study its properties. There are difficulties in estimating the thresholds of the MTPD. We construct a cluster truncated Pareto distribution (CTPD) by using a two-point slope technique to estimate the MTPD from a random sample. Finally, we apply the MTPD and CTPD to the example which we observed in the beginning, and compare the proposed method with existing estimation methods. The results of log-log plots and goodness-of-fit tests show that the MTPD and the cluster estimation method produce a good fitting distribution with real world data.