The triangular distribution as a proxy for the beta distribution in risk analysis

Abstract

The beta distribution is seen as a suitable model in risk analysis because it provides a wide variety of distributional shapes over a finite interval. Unfortunately, the beta distribution is not easily understood and its parameters are not easily estimated. This paper explores the possibility of using the more intuitively obvious triangular distribution as a proxy for the beta distribution. It is shown that the differences between the two distribution functions are seldom significant and a procedure is proposed for estimating the parameters of a triangular distribution on the basis of two extreme percentiles and the median