Question

One-tail & two-tail tests

 

30 Oct 2017
Answer :
Word Count : 653

Suppose we have a null hypothesis H0 and an alternative hypothesis H1. We consider the distribution given by the null hypothesis and perform a test to determine whether or not the null hypothesis should be rejected in favour of the alternative hypothesis.

There are two different types of tests that can be performed. A one-tailed test looks for an increase or decrease in the parameter whereas a two-tailed test looks for any change in the parameter (which can be any change- increase or decrease).

We can perform the test at any level (usually 1%, 5% or 10%). For example, performing the test at a 5% level means that there is a 5% chance of wrongly rejecting H0.

If we perform the test at the 5% level and decide to reject the null hypothesis, we say "there is significant evidence at the 5% level to suggest the hypothesis is false".

One-Tailed Test

We choose a critical region. In a one-tailed test, the critical region will have just one part (the red area below). If our sample value lies in this region, we reject the null hypothesis in favour of the

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