Decision Rules

What: Decision Rule Traditional method: • If the test statistic falls within the critical region, reject H0.

• If the test statistic does not fall within the critical region, fail to reject H0.

• Reject H0 if value of the test statistic is less than or equal to critical value (Reject H0 if zt≤ zc)

What: Decision Rule

P-value method: •Using the significance level : •If P-value   , reject H0.

•If P-value >  , fail to reject H0.

How to: Set the criteria for a decision

1. State the level of significance for a test.

• Use of “significant” in this context means “the observed difference is not likely due to chance.”

• It does not mean of “important” or “meaningful.”

How to: Set the criteria for a decision 2. Make decision • Alpha (α) is a probability threshold for a decision • When p value > .10 → the observed difference is “not significant” • When p value ≤ .10 → the observed difference is “marginally significant” • When p value ≤ .05 → the observed difference is “significant” • When p value ≤ .01 → the observed difference is “highly significant” • If zt≤ zc, we will reject the null hypothesis.