If costs associated with a Type 1 error are high and a Type 2 error is not costly, set the level of significance much higher, perhaps at .25 or higher.

Question

Quizplus · Accepted Answer

Setting the level of significance higher (e.g., at .25) increases the probability of making a Type 1 error. When costs associated with a Type 1 error are high, it is preferable to set a lower level of significance (e.g., .01 or .05) to reduce the risk of making such an error.

If Costs Associated with a Type 1 Error Are High