"I had this question when I was shopping for some rates to refinance my house: how do know if I have found the lowest rates after searching through a bunch of offers with a reasonable amount of confidence, in a mathematical/statistical term. For example, if found ""x"" offers from different vendors, is the amount of ""x"" large enough to represent the bigger population i.e. all offers out there? The reason I am asking is that I vaguely remember there are statistical sampling techniques from college days that survey companies used to represent the bigger populations. For instance, after surveying 2000 people, they can conclude something for the U.S. population. In other words, they ""know"" 2000 people can represent the U.S. population with some scientific backing. Just curious, if there is

Kallie Fritz

Kallie Fritz

Answered question

2022-09-25

I had this question when I was shopping for some rates to refinance my house: how do know if I have found the lowest rates after searching through a bunch of offers with a reasonable amount of confidence, in a mathematical/statistical term. For example, if found "x" offers from different vendors, is the amount of "x" large enough to represent the bigger population i.e. all offers out there?
The reason I am asking is that I vaguely remember there are statistical sampling techniques from college days that survey companies used to represent the bigger populations. For instance, after surveying 2000 people, they can conclude something for the U.S. population. In other words, they "know" 2000 people can represent the U.S. population with some scientific backing.
Just curious, if there is a way to figure out the magical number "x", then I can go with the lowest rate after browsing through "x" vendors as well. The question is purely theoretical in this simple case: the lowest rate wins. Any leads or ideas are appreciated.

Answer & Explanation

Jaelyn Levine

Jaelyn Levine

Beginner2022-09-26Added 9 answers

You can't guarantee to have found the lowest rate without surveying every vendor out there. If you skip one, that might be the lowest one. What you can try to do is approximate the distribution and pick an acceptably low one. You also can get some idea how hard you will have to work to get a better one.
For example, your samples might look like a uniform distribution. If you have a random sample of n items, the expected value of the lowest one is 1 n + 1 of the way up from the bottom. If you have 10 offers that span 1 2 %, under this model the real span is about 11 9 1 2 % and if you keep looking you might save 1 18 %. You would expect to have to call 11 more to find one that is better than what you have, which might be only marginally so. Real distributions are often not one of the simple ones in the textbook, so a dozen or so points may not tell you what the distribution is. It is also very hard to sample randomly from all the vendors, as some classes may be uniformly lower in price than others. If you can't find those classes, you may miss out.

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