Level of Significance

Title

Level of significance:

• is the probability of making a Type 1 Error when the null hypothesis is true as an equality
• LoS: $\alpha$ (commonly equals to 0.05 or 0.01)
• If the cost of making a Type I error is high, small values of $\alpha$ are preferred.
  • Like medication, must have small LoS
• If the cost of making a Type I error is not too high, larger values of $\alpha$ are typically used.
  • it is ok to make mistake
• Significance tests: Application of hypothesis testing that only control Type 1 error