The Pareto distribution is used under these conditions:
Conditions and parameters are complex. See: Fishman, G. Springer Series in Operations Research. NY: Springer-Verlag, 1996.
Note: The location parameter is the lower bound for the variable. After you select the Location parameter, you can estimate the shape parameter. The shape parameter is a number greater than 0, usually greater than 1. The larger the shape parameter, the smaller the variance and the thicker the right tail of the distribution. |