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P-Value vs Confidence Interval Communication

EasyStatistics & Probability00:00
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Problem

Business Context

StreamCart ran an A/B test on a new mobile checkout layout. The product manager wants a recommendation not only on whether the result is statistically significant, but also on whether to communicate the outcome using a p-value, a confidence interval, or both.

Problem Statement

Analyze the experiment result for conversion rate and decide how to communicate it to two audiences: (1) the product manager deciding on rollout and (2) the executive team reviewing experiment impact.

Given Data

GroupSample SizeConversionsConversion Rate
Control18,4002,20812.0%
Treatment18,1002,31712.8%

Additional inputs:

ParameterValue
Significance level0.05
Confidence level95%

The observed lift is 0.8 percentage points.

Requirements

  1. State the null and alternative hypotheses for a two-sided test.
  2. Compute the pooled proportion and the standard error for the hypothesis test.
  3. Calculate the z-statistic and two-sided p-value.
  4. Compute the 95% confidence interval for the difference in conversion rates.
  5. Decide whether the result is statistically significant at the 5% level.
  6. Explain when a p-value is the better communication tool and when a confidence interval is better.
  7. Recommend what StreamCart should report to the product manager and to executives.

Assumptions

  • Users were randomly assigned to control and treatment.
  • Each observation is independent.
  • Sample sizes are large enough for normal approximation.
  • No major instrumentation or logging issues affected conversion counts.