Chapter 11: Introduction to Hypothesis Testing
11.1 Concepts of Hypothesis Testing
•
Null hypothesis
: H
0
•
Alternative
or
Research Hypothesis
: H
1
•
Type I Error
occurs when we reject a true null hypothesis (innocent is convicted)
o
Probability of this error is denoted by
•
Type II Error
is defined as not rejecting a false null hypothesis (guilty is acquitted)
o
Probability of this error is denoted by ,
and
are inversely related, meaning that any attempt to
reduce one will increase the other
•
The Critical Concepts in Hypothesis Testing:
1.
There are two hypotheses. One is called the null hypothesis and the other the alternative or research
hypothesis
2.
The testing procedure begins with the assumption that the null hypothesis is true.
3.
The goal of the process is to determine whether there is enough evidence to infer that the alternative
hypothesis is true.
4.
There are two possible decisions:
a.
Conclude that there is enough evidence to support the alternative hypothesis
b.
Conclude that there is not enough evidence to support the alternative hypothesis
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 Fall '11
 tanaka
 Economics, Statistics, Null hypothesis, Statistical hypothesis testing

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