Section 15 Hypothesis Testing: Steps

15.1 Steps of Hypothesis testing

  1. Identify the parameter of interest

  2. Define \(\large H_O\) and \(\large H_A\)

  3. Define a significance level \(\large \alpha\)

  4. Calculate an estimate of the parameter

  5. Determine an appropriate test statistic, its distribution when \(\large H_O\) is correct, calculate the value of test statistic from the sample

  6. Obtain the probability under the distribution of the test statistic

  7. Compare the observed probability given \(\large \alpha\) and conclude