What is a 'Type I Error'
A Type I error is a type of error that occurs when a null hypothesis is rejected although it is true. The error accepts the alternative hypothesis, despite it being attributed to chance.
Also referred to as a "false positive".
Next Up
BREAKING DOWN 'Type I Error'
Type I error rejects an idea that should have been accepted. It also claims that two observances are different, when they are actually the same.
For example, let's look at the trail of an accused criminal. The null hypothesis is that the person is innocent, while the alternative is guilty. A Type I error in this case would mean that the person is found guilty and is sent to jail, despite actually being innocent.
RELATED TERMS

Type II Error
A statistical term used within the context of hypothesis testing ... 
Hypothesis Testing
A process by which an analyst tests a statistical hypothesis. ... 
Alpha Risk
The risk in a statistical test that a null hypothesis will be ... 
Null Hypothesis
A type of hypothesis used in statistics that proposes that no ... 
Accounting Error
An error in an accounting item that was not caused intentionally. ... 
NonSampling Error
A statistical error caused by human error to which a specific ...
Related Articles

Investing
What is a Null Hypothesis?
In statistics, a null hypothesis is assumed true until proven otherwise. 
Trading
Hypothesis Testing in Finance: Concept & Examples
When you're indecisive about an investment, the best way to keep a cool head might be test various hypotheses using the most relevant statistics. 
Investing
How Statistical Significance is Determined
If something is statistically significant, itâ€™s unlikely that it happened by chance. 
ETFs & Mutual Funds
3 Reasons Tracking Error Matters
Discover three ways investors can use tracking error to measure performance for a mutual fund or ETF, whether indexed or actively managed. 
Investing
Calculating Tracking Error
Tracking error is the difference between the return on a portfolio or fund, and the benchmark it is expected to mirror (or track). 
Trading
What's a TTest?
TTest is a term from statistics that allows for the comparison of two data populations and their means. The test is used to see if the two sets of data are significantly different from one another. ... 
Personal Finance
What Does Errors and Omissions Insurance Cover?
Errors and omissions insurance protects companies and individuals against claims made by clients for inadequate work or negligent actions. 
Investing
Explaining Standard Error
Standard error is a statistical term that measures the accuracy with which a sample represents a population. 
Managing Wealth
Top 3 Mistakes That Cause Traders To Fail
Find out how to avoid these common investing errors that have sunk many investors' portfolios. 
Investing
9 Cognitive Biases That Affect Your Business
Human beings often act irrationally when it comes to business decisions. Behavioral finance explains the difference between what we should do and what we do.
RELATED FAQS

What does a strong null hypothesis mean?
Find out what null hypothesis is and why it is important to the scientific method. See how statisticians and economists use ... Read Answer >> 
What is the relationship between confidence inferrals and a null hypothesis?
Learn about the relationship between confidence intervals and the null hypothesis in scientific research and empirical experimentation. Read Answer >> 
What is a relative standard error?
Find out how to distinguish between mean, standard deviation, standard error and relative standard error in statistical survey ... Read Answer >> 
How is the standard error used in trading?
Understand how the standard error is used in statistics and what it measures. Learn how the standard error is used in trading ... Read Answer >> 
How can I calculate the tracking error of an ETF or indexed mutual fund?
Understand what tracking error is and learn about the significant difference it can represent for investors who favor index ... Read Answer >> 
How do I fix an error on my credit report?
Take control over your credit report by disputing false claims, accounts and information to the three major credit reporting ... Read Answer >>