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IAI Actuarial Core Principles · Actuarial Statistics · Generalised linear models

Model A (3 parameters) and model B (6 parameters) are fitted to n = 200 observations. The maximised log-likelihoods are -310 and -306 respectively. Using AIC = 2k - 2 log L, which statement is correct?

AIC for A is 6 + 620 = 626 and for B is 12 + 612 = 624. The lower AIC belongs to B, so B is preferred despite its three extra parameters.

  1. AAIC of A is 626 and B is 624, so B is preferred
  2. BAIC of A is 626 and B is 624, so A is preferred
  3. CAIC of A is 623 and B is 618, so B is preferred
  4. DAIC of A is 626 and B is 630, so A is preferredCorrect
  5. AIC of A is 620 and B is 612, so B is preferred

Explanation

AIC(A) = 6 + 620 = 626. AIC(B) = 12 + 612 = 624? Check: 2*6 = 12 and -2(-306) = 612, giving 624. So B has the lower AIC, and B is preferred.

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