The variance of a truncated random variable and the riskiness of the underlying variables (Q1382122)

Given a pair of random variables \(X\) and \(Y\) and four constants \(a,b,c\) and \(d\), consider the random variable \(\text{Max}(aY+b, \text{Min} (cY+d,X))\). This paper investigates how the variance of this ``truncated'' random variable is affected by a binomial version of the Rothschild-Stiglitz measure of increased riskiness of \(X\) and \(Y\).