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Confidence Level

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Definition

A quantity associated with a confidence interval, which gives the proportion of intervals that will contain the true value of the parameter in repeated random sampling. For instance, a 95% confidence level indicates that about 95% of the Confidence Intervals obtained using the same method from a large number of Random Samples of the same size, will contain the true parameter value. 5% of such intervals will not contain the true parameter value. Also known as ‘confidence coefficient’.

Application

The confidence level is written as: 100(1-α)% where α (the significance level) is a small, pre-assigned value most commonly chosen in the range 0.01 to 0.2

See Also

Significance Level, Confidence Interval, Confidence Bound