Type I and Type II Error: Jerzy Neyman and Egon Pearson’s 1933 Rule for Choosing Which Mistake to Make, and Why the Long-Term Equity Investor Cannot Minimise Both

Two overlapping probability distributions divided by a single decision threshold, with the Type I error region shaded gold to the right and the Type II error region shaded blue to the left.

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Manish Goel, FCA

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Type I and Type II Error: Jerzy Neyman and Egon Pearson’s 1933 Rule for Choosing Which Mistake to Make, and Why the Long-Term Equity Investor Cannot Minimise Both

More posts

The Box That Was Only a Box: Karl Duncker’s 1945 Candle Problem, the Premium AT&T Paid for an Accounting Label in 1991, and Why the Long-Term Equity Investor Must Ask What Made the Number

Audited, Not Published: How to Read the Cost Audit Trail in an Indian Annual Report

The Latent Group: Mancur Olson’s 1965 Logic of Collective Action, the Swing Producer That Stopped Paying in 1985, the Seven Shares in Ten That Go Unvoted, and Why the Long-Term Equity Investor Must Ask Who Bears the Burden

Two Thousand Birds or Two Hundred Thousand: Desvousges’s 1993 Oil-Pond Survey, Hartzmark and Sussman’s 2019 Globes, and Why the Long-Term Equity Investor Must Price the Quantity, Not the Symbol