What Are Some of the Negative Effects of Increasing the Sensitivity

question 14

Essay

What are some of the negative effects of increasing the sensitivity of managerial pay to firm performance?

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Definitions:

Level of Significance

The threshold chosen by the researcher which determines the probability at which the null hypothesis will be rejected, often denoted by alpha (α).

Operating Characteristic

A function or curve that describes the discriminating ability of a test across various conditions or thresholds.

Sample Size

The number of individuals, observations, or data points collected or selected from a population for the purpose of analysis.

Type II Error

Occurs when a statistical test fails to reject a false null hypothesis, meaning it wrongly indicates there is no effect when one exists.