Significance Level and Decision Rules¶
Overview¶
The significance level \(\alpha\) is the probability of rejecting \(H_0\) when it is true (Type I error rate).
Decision Rules¶
- p-value approach: Reject \(H_0\) if \(p \leq \alpha\)
- Critical value approach: Reject \(H_0\) if the test statistic falls in the rejection region
Common Significance Levels¶
| \(\alpha\) | Interpretation |
|---|---|
| 0.10 | Weak evidence against \(H_0\) |
| 0.05 | Moderate evidence (most common) |
| 0.01 | Strong evidence |
| 0.001 | Very strong evidence |