Solution

ID: past-exam-of-the-mathematics-course-of-the-university-of-cambridge/2014/iii/paper-35/3/h/solution

Put . The posterior mean of the Gaussian practical-null mixture is
Near zero, , so the narrow component has high posterior probability and is small when . This pulls the Bayesian model averaging posterior toward zero. For the given ratios, writing gives
Thus the order statement alone does not guarantee strong pull toward zero: already has the opposite model preference.
As grows, makes , and the mixture model approaches . Its center is exactly , and approximately only for a sufficiently diffuse wide prior, meaning . Here , so the relative displacement is about one percent. Large observations alone do not remove this finite-prior shrinkage.

New to topics? Read the docs here!