计量经济学第4、5章chapt45-StatisticalPropertiesoftheOLSEstimators-Long.pptVIP

Type I and Type II errors For a given sample size, if we try to reduce a Type I error, a Type II error increases, and vice versa. That is, given the sample size, if we try to reduce the probability of rejecting the true hypothesis, we at the same time increase the probability of accepting the false hypothesis. So there is a tradeoff involved between these two types of errors. Now the only way we can decide about the tradeoff is to find out the relative costs of the two types of errors. Type I and Type II errors The cost of making Error Type I is low relative to the cost of making Error Typ