sbe10_06a-51 - Statistics for Business and Economics Chapter 6 Inferences Based on a Single Sample Tests of Hypothesis Learning Objectives 1 Distinguish

sbe10_06a-51 - Statistics for Business and Economics...

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Statistics for Business and Economics Chapter 6 Inferences Based on a Single Sample: Tests of Hypothesis
Learning Objectives 1. Distinguish Types of Hypotheses 2. Describe Hypothesis Testing Process 3. Explain p-Value Concept 4. Solve Hypothesis Testing Problems Based on a Single Sample 5. Explain Power of a Test
Statistical Methods Statistical Methods Estimation Hypothesis Testing Inferential Statistics Descriptive Statistics
Nonstatistical Hypothesis Testing A criminal trial is an example of hypothesis testing without the statistics. In a trial a jury must decide between two hypotheses. The null hypothesis is H 0 : The defendant is innocent The alternative hypothesis or research hypothesis is H 1 : The defendant is guilty The jury does not know which hypothesis is true. They must make a decision on the basis of evidence presented.
Nonstatistical Hypothesis Testing
Nonstatistical Hypothesis Testing
Nonstatistical Hypothesis Testing There are two possible errors. A Type I error occurs when we reject a true null hypothesis. That is, a Type I error occurs when the jury convicts an innocent person. A Type II error occurs when we don’t reject a false null hypothesis. That occurs when a guilty defendant is acquitted.
Nonstatistical Hypothesis Testing
Nonstatistical Hypothesis Testing 5. Two possible errors can be made. Type I error: Reject a true null hypothesis Type II error: Do not reject a false null hypothesis. P(Type I error) = α P(Type II error) = β
Decision Results H 0 : Innocent Jury Trial Actual Situation Verdict Innocent Guilty Innocent Correct Error Guilty Error Correct H 0 Test Actual Situation Decision H 0 True H 0 False Accept H 0 1 – Type II Error ( ) Reject H 0 Type I Error ( ) Power (1 – )
& Have an Inverse Relationship You can’t reduce both errors simultaneously!
Nonstatistical Hypothesis Testing In our judicial system Type I errors are regarded as more serious. We try to avoid convicting innocent people. We are more willing to acquit guilty people.

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