Intro to Business Statistics

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Type I

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Intro to Business Statistics

Definition

A Type I error occurs when a true null hypothesis is incorrectly rejected. It is also known as a false positive error.

5 Must Know Facts For Your Next Test

  1. The probability of committing a Type I error is denoted by $\alpha$ (alpha).
  2. $\alpha$ is often set at 0.05, meaning there is a 5% risk of rejecting the null hypothesis when it is actually true.
  3. Reducing $\alpha$ decreases the likelihood of a Type I error but increases the risk of a Type II error.
  4. Type I errors are considered more serious in many contexts because they imply finding an effect or difference that does not exist.
  5. In hypothesis testing, controlling for Type I errors involves setting an appropriate level of significance ($\alpha$) before conducting the test.

Review Questions

  • What does a Type I error signify in hypothesis testing?
  • How is the probability of making a Type I error represented and typically set?
  • Why might reducing $\alpha$ increase the risk of committing another type of error?
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