hypothesis testing - Hypothesis Testing Purpose We are...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Hypothesis Testing Purpose: We are interested in whether or not applying a decision to a situation yields a change in effect (profits, customers, etc.) The application of a decision is called a “treatment.” We’re either interested in if applying the treatment makes no difference, or make some difference. 1. State hypotheses about the situation: Ho = Null Hypothesis (status quo or “no change” hypothesis) Should include some kind of equality (=, ≤, ≥) H1 or Ha = Alternative hypothesis (what we’re hoping is true, what we’re trying to prove) Should include inequality (≠, <, >) *** Hypotheses we’re stating are about the population, not the sample. 2. Decide on whether we’re performing a one-tailed (directional) test or a two-tailed (exploratory) test. a. If all we care about is that there was a change (positive or negative), then we have a two-tailed test. b. If we only care about a change in one direction only, then we have
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: a one-tailed test. 3. Decide on a significance level (alpha-value): .05 4. Perform our test in JMP a. Select Analyze b. Fit Y by X c. X is always the treatment column d. Y is always the values (sales, number of customers) e. Click ok f. Click on the red arrow and select “t-test” g. Depending on whether it is a one or a two tailed test, read the correct P-value 5. Decide: if P-value is less than .05, reject the Ho. . Else, you fail to reject Ho “If P is low, Null must go.” REMEMBER: We only reject or fail to reject Ho. • We could have two kinds of error. . because remember, we’re making an inference about the population. So, there is a chance we could be wrong. o If we rejected Ho, when in fact, it was true – Type I Error o If we failed to reject Ho, when in fact, it was false – Type II Error...
View Full Document

  • Fall '13
  • Sale
  • Interest, Null hypothesis, Hypothesis testing, Statistical hypothesis testing, Type I and type II errors

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern