The level of significance, also known as alpha (α), is a predetermined threshold used in hypothesis testing to determine whether to reject or fail to reject the null hypothesis. Commonly used levels include 0.05 and 0.01.
Related terms
Critical Region/Critical Value: It defines extreme values for test statistics beyond which we would reject the null hypothesis.
Type II Error: This occurs when we fail to reject a false null hypothesis. It's like letting a guilty person go free in a court trial.
One-tailed Test: A hypothesis test where the alternative hypothesis is one-sided and we are only interested in deviations in one direction.