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Bag A or Bag B?

Brenda Gunderson

© 2018 The Regents of the University of Michigan

Except where otherwise noted, this work is licensed under
http:creativecommons.org/licenses/by-nc/3.0/
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Bag A or Bag B?

Total Value: -$560 Total Value: -$1890

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Select one voucher at random

from shown bag and decide
between two competing theories

Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B
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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select -$1000?

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select $1000?

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select $60?

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select $10?

Starting for form

a decision rule
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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select $50?

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select $20?

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

What if select $40 or $30?

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
$50 or higher
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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
$50 or higher

Error: Reject Null when Null True

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
$50 or higher

Error: Reject Null when Null True

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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
$50 or higher

Other Error: Do not Reject Null

when Alternative True
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Null:
Shown bag is Bag A

Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
$50 or higher

Other Error: Do not Reject Null

when Alternative True
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2/20 = 0.10 Null:

Shown bag is Bag A
α = significance level
Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
6/20 = 0.30
$50 or higher
β
Type 1 Error: Reject Null when Null True
Type 2 Error: Do not Reject Null
when Alternative True
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2/20 = 0.10 Null:

Shown bag is Bag A
α = significance level
Alternative:
Shown bag is Bag B

Reject the Null Decision Rule:

Reject the Null if
voucher is
$50 or higher
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2/20 = 0.10 Null:

Shown bag is Bag A
α = significance level
Alternative:
Shown bag is Bag B

Reject the Null

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2/20 = 0.10 Null:

Shown bag is Bag A
α = significance level
p-value =1/20 = 0.05 Alternative:
Shown bag is Bag B

Reject the Null

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2/20 = 0.10 Null:

Shown bag is Bag A
α = significance level
p-value =2/20 = 0.10 Alternative:
Shown bag is Bag B

Reject the Null

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2/20 = 0.10 Null:

Shown bag is Bag A
α = significance level
p-value =6/20 = 0.30 Alternative:
Shown bag is Bag B

Reject the Null

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Hypothesis Testing

• Stating Hypotheses
• Selecting a Significance Level
• Using data to make our decision (via p-value)

More details about making inferences ahead!