Some Applications of the Lorenz Curve in Decision Analysis

SYNOPTIC ABSTRACT

Classical income distribution measures in Economics such as the Lorenz curve, the Gini index and the Pietra ratio, are shown here to have applications in Bayesian Decision Theory, in the context of the two-action and multi-action problems.

Key words and phrases:

• Lorenz curve
• Gini index
• Pietra ratio
• Linear loss function
• Expected Value of Perfect Information
• Beta distribution