Hypothesis Testing

Abstract

The purpose of hypothesis testing is to provide the decision maker with an efficient mechanism for reducing uncertainty using an inferential procedure to test the credibility of a potential solution to a strategic challenge. This is done by choosing an initial hypothesis about how to solve a problem and limiting data collection and analysis to those data that either defend or reject this hypothesis. This can be far more efficient than traditional methods of collecting data without purpose and deducing solutions by analyzing relevant data and eliminating irrelevant data along the way. This chapter discusses the underlying theory, core idea, depiction, process, insight or value created, and risks and limitations of hypothesis testing. The chapter also continues the illustration of the DISH Network and applies the steps of hypothesis testing to this case.