- Collect Data: (For each of 8 attempts, was Paul's prediction right?)
- Calculate a test statistic: \(x = 8\) (observed number correct)
- Write down hypotheses:
- Null Hypothesis: Paul was just guessing: \(p = 0.5\)
- Alternative Hypothesis: Paul is psychic: \(p > 0.5\)
- Sampling Distribution of the test statistic, assuming null hypothesis is true.
- p-value: probability of getting a test statistic at least as extreme as what we observed, assuming null hypothesis is true.
- Conclusion: Compare the p-value to the significance level \(\alpha\). If the p-value is small, it's unlikely that Paul would get 8/8 right if he was just guessing, so we reject the null