Unbiased estimator
Quantitative Finance glossary · Probability, Statistics & Linear Algebra
Definition
An estimator whose expected value equals the true parameter being estimated.
Unbiased estimator in plain English
An estimator is just a recipe for guessing a number you can't see directly — like guessing the average height of everyone in your country by measuring a sample. It's called unbiased when, if you repeated that guessing process over and over on fresh samples, the guesses would center exactly on the true answer, with no built-in tendency to run high or low. Any single guess can still be off; unbiased only promises there's no systematic lean. It's like a bathroom scale that jiggles a bit each time but, averaged over many weigh-ins, reads your real weight — versus a biased scale that's always 3 pounds heavy.
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