Decision Rule

In the context of statistical hypothesis testing, decision rule refers to the rule that specifies how to choose between two (or more) competing hypotheses about the observed data. A decision rule specifies the statistical parameter of interest, the test statistic to calculate, and how to use the test statistic to choose among the various hypotheses about the data. More broadly, in the context of statistical decision theory, a decision rule can be thought of as a procedure for making rational choices given uncertain information.

The choice of a decision rule depends, among other things, on the nature of the data, what one needs to decide about the data, and at what level of significance. For instance, decision rules used for normally distributed (or Gaussian) data are ...