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Hypothesis Testing.md

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Hypothesis Testing

A hypothesis is a statement about the value of a population parameter

  • To carry out a test you have the null hypothesis $H_0$ which you assume to be true
  • The alternative hypothesis $H_1$ tells you about the parameter if $H_0$ is false

For a one-tailed test: $H_0: P=n$, $H_1: P>n$ or $H_0: P=n$, $H_1: P<n$ For two-tailed test: $H_0: P=n$, $H_1: P≠n$

If the probability of $H_0$ < significance level then you reject it. A critical region is a region of the probability distribution which if the test statistic falls in you reject $H_0$ The actual significance level is the probability of incorrectly rejecting the null hypothesis