Jensen's inequality can be tightened in the context of discrete random variables. The suggested new inequality coincides with Jensen's inequality only when the expected value of the random variable is an integer, in all other cases the inequality is tighter than Jensen's. This improvement is used to derive a welfare result in the context of a mating market where male agents are exposed to paternal uncertainty. It is shown that social welfare is highest when paternity is certain, a result that cannot be obtained when relying on Jensen's inequality.
ASJC Scopus subject areas
- Sociology and Political Science
- Social Sciences(all)
- Statistics, Probability and Uncertainty