Law of Iterated Logarithm (LIL)
An evolved variation of the Law of Large Numbers is the Law of the Iterated Logarithm. It offers for the sample average an exact rate of convergence. It says the sample average will fluctuate about the predicted value, but as the number of observations rises the oscillations will get ever less.
In the coin flipping example, the LIL indicates that, as the number of coin flips rises, the sample average will not only converge to 0.5 but also offers a specific range within where it is most likely to fall.
Law of Large Numbers
Law of Large Numbers (LLN) is a mathematical theorem that states the average of the results obtained from many independent random samples.
In this article, we have discussed the Law of Large Numbers definition, its limitations, examples and others in detail.
Table of Content
- What is Law of Large Numbers?
- Limitation of Law of Large Numbers
- Types of Law of Large Numbers
- Why is Law of Large Numbers Important?
- Law of Large Numbers (LLN) and Central Limit Theorem (CLT)
- Examples of Law of Large Numbers
- Law of Large Numbers in Finance