Optimal sequential testing of two simple hypotheses in presence of control variables

Mathematics – Statistics Theory

Scientific paper

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To be published in International Mathematical Forum, v. 3 (2008), no.41, 2025 - 2048

Scientific paper

Suppose that at any stage of a statistical experiment a control variable $X$ that affects the distribution of the observed data $Y$ can be used. The distribution of $Y$ depends on some unknown parameter $\theta$, and we consider the classical problem of testing a simple hypothesis $H_0: \theta=\theta_0$ against a simple alternative $H_1: \theta=\theta_1$ allowing the data to be controlled by $X$, in the following sequential context. The experiment starts with assigning a value $X_1$ to the control variable and observing $Y_1$ as a response. After some analysis, we choose another value $X_2$ for the control variable, and observe $Y_2$ as a response, etc. It is supposed that the experiment eventually stops, and at that moment a final decision in favour of $H_0$ or $H_1$ is to be taken. In this article, our aim is to characterize the structure of optimal sequential procedures, based on this type of data, for testing a simple hypothesis against a simple alternative.

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