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A Rate of Incoherence Applied to Fixed-Level Testing

Published online by Cambridge University Press:  01 January 2022

Mark J. Schervish ,
Teddy Seidenfeld  and
Joseph B. Kadane
Joseph B. Kadane*
Affiliation:
Carnegie Mellon University
*
Mark J. Schervish and Joseph B. Kadane are Professor, Department of Statistics and Teddy Seidenfeld is Professor, Departments of Statistics and Philosophy, Carnegie Mellon University, Pittsburgh, PA 15213.
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Abstract

It has long been known that the practice of testing all hypotheses at the same level (such as 0.05), regardless of the distribution of the data, is not consistent with Bayesian expected utility maximization. According to de Finetti's “Dutch Book” argument, procedures that are not consistent with expected utility maximization are incoherent and they lead to gambles that are sure to lose no matter what happens. In this paper, we use a method to measure the rate at which incoherent procedures are sure to lose, so that we can distinguish slightly incoherent procedures from grossly incoherent ones. We present an analysis of testing a simple hypothesis against a simple alternative as a case-study of how the method can work.

Type
Research Article
Information
Philosophy of Science , Volume 69 , Issue S3 , September 2002 , pp. S248 - S264
Copyright
Copyright © The Philosophy of Science Association

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