Rejection Region and Critical Values

We have seen that we reject H0 when p < ,

(where p is the probability of our results or more extreme
results, assumig H0 to be true).
Our p value is gotten by taking our test statistic (e.g. Z Y )
and using its probability distribution (e.g. normal).
However, there is another way to see if we should reject H0.
For one tail (directional) tests
Recall that we have defined Z as the Z value such that the
probability (Z > Z) = .
e.g. Z.05 = 1.645; Z.01 = 2.33, etc.
Thus, whenever Z Y > Z, we know that p < and we can
therefore reject H0 with a one-tail test with significance
level .
For two tail (non-directional) tests
Z/2 is the Z value such that the probability (Z > Z/2) = /2.
e.g. if = .05, /2 = .025 and Z/2 = 1.96
if = .01, /2 = .005 and Z/2 = 2.575
Thus, whenever Z Y > Z/2, we know that p < and we can
therefore reject H0 with a two-tail test with significance
level .

Confidence Intervals and hypothesis testing

0. Suppose our null hypothesis is that :Y = :0.
0.

If :0 is outside the 1 - " CI, we would reject that

null hypothesis, if using a two tailed test with
significance level ".

0.

If :0 is within the 1 - " CI, we would not reject that

null hypothesis, if using a two tailed test with
significance level ".

But even if 0 is within the confidence interval, this does not

prove that = 0. Remember that 0 is not the only possible value
of that will be within the confidence interval.

The t-distribution
Recall

Y 0
Y

To compute our standard error we did not use the

population standard deviation (Y) but rather used the
sample estimate (sY).
Gosset, known as Student, proved that when we do that the
normal distribution is not quite the right distribution to use
in computing the probabilities. He showed that the proper
distribution is the t- distribution.
The t-distribution is like the normal in also being a bellcurve but
a) it is somewhat wider (has bigger tails)
b) its exact form depends on degrees of freedom)