5. The Power of a Test
d. explain a decision rule, the power of a test, and the relation between confidence intervals and hypothesis tests;
In hypothesis testing, what is Power? And how is it defined?
Power is the probability of correctly rejecting a false null hypothesis. Power is therefore defined as: 1 - β
where β
is the Type II error probability.
What is the likely outcome if the power of an experiment is low? If the power of an experiment is low, then there is a good chance that the experiment will be inconclusive. That is why it is so important to consider power in the design of experiments.
Source:
CFA
Graph:
- 115.020.60 Reading 11 - Hypothesis Testing to 115.020.60.05 Reading 11 - 5. The Power of a Test