It is often necessary to estimate a frequency function or certain points on a frequency function from very limited data. A usual procedure for this estimation involves two steps. From the set of “well-known” frequency functions, e.g., the normal, poisson, binomial, etc., one chooses that function which seems likely to best “fit” and then uses the available data to estimate the parameters of the chosen distribution. If no one “well-known” function can be chosen a priori, then perhaps several likely candidates are tried and the one which fits best according to some criterion is chosen. For many purposes, this procedure is quite unobjectionable.

Determining the market values of streams of future returns is a task common to many sorts of economic analysis. The literature on this subject is extensive at all levels of abstraction. However, most work has not taken uncertainty into account in a meaningful way.

Robert C. Meier, The Application of Optimum-Seeking Techniques to Simulation Studies: A Preliminary Evaluation, The Journal of Financial and Quantitative Analysis, Vol. 2, No. 1 (Mar., 1967), pp. 31-51

Most businesses sell on credit. To administer credit, such companies set credit granting, term, and collection policies. This article analyzes one aspect of credit granting policy: the determination of the optimal number of credit applicants that should be accepted by a creditor. The emphasis in the relevant literature traditionally has been on techniques for estimating a credit applicant's probability of default and, to a lesser degree, on the decision to accept an applicant given his estimated probability of default. Cumulatively, these two decisions are crucial to any business selling on credit.

Don C. Bridenstine, Implications of Balance of Payments Deficits for Bank Liquidity: Discussion, The Journal of Financial and Quantitative Analysis, Vol. 1, No. 1, Proceedings of the First Annual Meeting of the Western Finance Association (Mar., 1966), pp. 76-80

We study lease accounting in an international panel data set to examine how accounting outcomes vary with two features of accounting standards: the emphasis on using professional judgement to apply principles, and the presence or absence of bright-line tests. We study four countries—Australia, Canada, the UK, and the US—and companies in two lease-intensive industries—retail and transportation. Our primary study period spans the time when Australia and the UK switched from domestic to international accounting standards, and in one test, we also consider Canada’s transition to international standards. We find that neither an explicit requirement to apply a principle nor omitting bright-line tests materially increases the use of capital lease treatment among these firms. Overall, we conclude that this financial reporting outcome is relatively insensitive to these standard-setting tools.