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.