Take Home Midterm, Statistics 512, Spring 2005

This is a take home midterm exam and is due Thursday, February 24th at the beginning of class. You can consult any references but cannot speak with anyone (except for the instructor) about the exam. If you do not understand a question, send the instructor an email (dsmall@wharton.upenn.edu ) or speak with him. Good luck on the exam! 1. (How to ask embarrassing questions) You are asked to estimate the percentage of students on campus who have ever cheated, but you do not want to introduce a bias into your sample due to some students reluctance to tell the truth. You tell each person sampled secretly to flip a fair coin and if the coin is heads to answer the question in envelope A and if the coin is tails to answer the question in envelope B. Envelope A contains the question, Have you ever cheated and envelope B contains the question Were you born in Pennsylvania. You do not see the envelope the person uses (and hence do not see the question the person answers); you see only the response of yes or no. The hope is that an interviewee is more likely to respond truthfully if he or she realizes that the interviewee does not know which statement is being responded to. Assume that interviewees do in fact respond truthfully. You know from admissions records that the proportion of students on campus born in Pennsylvania is 0.3. (a) Let denote the proportion of students on campus who have ever cheated. As a function of , what is the probability that someone sampled responds with a yes? (b) Let X i = 1 if the ith person sampled answers yes and X i = 0 if the ith person sampled answers no. Based on a random sample with replacement of size n, construct an n unbiased estimator of that is a function of i =1 X i and n. (c) Find the mean square error of your estimator in (b). (d) Find an approximate 95 percent confidence interval for based on a sample of 100 n=100 with 50 responding yes, i.e., i =1 X i = 50 . You may either use a large sample method or the bootstrap to find this confidence interval. 2. Hogg, Craig and McKean, 5.4.9. 3. Suppose X 1 ,K , X n are independent random variables with pdf exp{ | x |} f ( x) = , 2 where is an unknown parameter; this is called the double exponential distribution. We are interested in testing H 0 : = 0 versus the one-sided alternative H1 : > 0 . Consider the following two tests: (i) a tests which rejects when the number of X i that are positive

is greater than some constant c1 (called the sign test) and (ii) the test with rejection region X > c2 for some constant c2 where X is the sample mean. (a) Show that median of the double exponential distribution is and variance of the double exponential distribution is 2. (b) For n=200, what is the value of c1 that sets the size of test (i) to be approximately 0.05? (c) For n=200, what is the value of c2 that sets the size of test (ii) to be approximately 0.05. (d) What approximately is the power for the alternative = 0.15 of tests (i) and (ii) when n=200 and the size of the tests is set to be approximately 0.05. (e) Which test, (i) or (ii), would you prefer for testing H 0 : = 0 vs. H1 : = 0.15 when n=200 and the size of both tests is set to be approximately 0.05? Explain your reasoning. 4. In a 1970 San Francisco court case, the issue of whether pin ball is a game of skill or chance was on trial. The following experiment was actually performed. A supposedly skilled player played 1000 games and won 100 games (If you are not familiar with pin ball, think of a game where a player plays against the pin ball machine, and the player wins or loses.) A nonskilled player was asked only to set the ball in play and then accumulate a score without using any skill. The nonskilled player won 50 of the 1000 games. Is the difference due to chance? In the end, the judge was concerned because the chance of winning even for the skilled players seems small. The issue in the case was whether or not the observed difference was actually due to skill. (a) As a statistician, you are called as an expert witness on the case. Using the NeymanPearson hypothesis testing paradigm and a test of size approximately 0.05, what would you tell the judge? You can use either a large sample method or the bootstrap to construct an approximate size 0.05 test. [Note: The background of the problem suggests that a one-sided test should be conducted, but for the purposes of this exam, it is acceptable if you conduct a two-sided test]. (b) Use the Monte Carlo method to study the true size of your approximate size 0.05 test from part (a) if the the true probability of both the skilled and nonskilled player winning a game is 0.05 (so that the null hypothesis is true) and both players play 1000 games. Hand in your R code.