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Confidence interval

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Confidence interval
The term confidence interval is widely used in statistics and probability. The term
actually denotes a range bound by two values, in which specified percentage of the parameter

under consideration is bound to be. For example, if you are having a data which is about the
obtained marks of a class of students and the data specifies a 95% confidence interval according
to distribution of the probability, then the confidence interval will be that interval bound by two
values (calculated according to type of probability distribution) in which there are 95% chances
of finding any value.
Null Hypothesis Significance Testing Procedure (NHSTP) is a technique in Basic and
Applied Social Psychology (BASP). In this method a null hypothesis is set first and the
probability of it being true is calculated which is designated as P. Then an alternative hypothesis
is set and Null Hypothesis is tested using conventional levels of probability i.e. 5% or 1% etc. If
the value of P comes out to be equal or lower than the conventional level, Null Hypothesis is
rejected otherwise it is accepted (Null Hypothesis Significance Testing, n.d).
However, there has been objections upon the effectiveness of NHSTP by some circles
associated with BASP. For example, one of the objections upon NHSTP is that a confidence
interval greater than 95% is too big for a research work to be designated as high quality research
work as a confidence interval larger than 95% will contain more values than it ought to be in a
standard research datas distribution. For this reason, BASP circles have been demanding the ban
of NHSTP and hence the ban of confidence intervals, consequently (Trafimow & Marks, 2015)
Not only BASP circles have been objecting upon it but scientists from other fields of
science have been objecting upon the use of p-value or NHSTP as well. Steven Goodman, a biostatistician at Stanford University says that in the past when p-values were used, false alarms
came into the action. As soon as the use of p-values was abandoned and better techniques came

into play, the reliability of the results increased (Nuzzo, 2015). So we can expect an increase in
reliability after the measure which BASP has taken i.e. to ban the use of NHSTP.
Strategy choice
The important steps of the strategy which I have chosen from Bazerman and
Moores book for discussion are as given below.
1. In the first step a comparison group containing values of the parameter under
consideration from the past is selected. Current decision or forecast is compared with this
particular comparison group.
2. As all the values of the comparison group are known, its mean as well as standard
deviation is calculated. From these two values, the distribution type of the data is
assessed to proceed further.
3. In this step, a forecast is made by the experts based on the decision which has been taken.
4. This step is quite difficult as well as critical in nature. In this step the results of the
forecast are assessed. This assessment may be done in more than one ways. One way to
assess the result of the forecast in many cases is to compare it with the past data i.e. the

comparison group.
In this step, the initial decision which is based on the intuition, is improved by adjusting
certain factors which are calculated after comparing the results of the forecast with that of
the comparison group or with that of some other analytical tool. In this way bias error of
the initial intuition based decision is reduced effectively.

The above guidelines are sufficient for anyone looking to adjust his intuition and a bias
which regresses the mean. For example, if a financial expert has the record of predicting the
indicators or financial factors accurately and he predicts the GNP of USA in 2015 to be 20
trillion Dollars, this value of 20 trillion Dollars may be given a factor of 1. On the other hand if

he is never known to predict accurately and the analysis of past values suggest that average value
of GNP ought to be 16 trillion Dollars, this value may be given a factor of 0. Now, the actual
GNP will be between 16 and 20 trillion Dollars. If it comes out to be 18 trillion dollars for
example, then the correlation factor may be of 0.5. It will be 0.75 if the value comes out to 19
trillion dollars and so on. So a correlation can be defined between the comparison group and the
current decision.
By the use of this strategy, management can constantly improve its decision making process
and eventually define a perfect correlation which may be used in the long run precisely with fine


Null Hypothesis Significance Testing. n.d. Wiki of science. Retrieved from:

David Trafimow & Michael Marks. (2015). Editorial. Basic and Applied Social

Psychology. 37:1-2
Regina Nuzzo. (2015). Scientists perturbed by the loss of stat tools to sift research fudge

from fact. Scientific American.

Bazerman, M., & Moore, D. A. (2012). Judgment in managerial decision making.