A New Exact and More Powerful Unconditional Test of no Treatment Effect from Binary Matched Pairs

Chris Lloyd, Melbourne Business School

Abstract

We consider the problem of testing for a difference in the probability of success from matched binary pairs. Starting with three standard inexact tests, the nuisance parameter is first estimated and then the residual dependence is eliminated by maximisation, producing what I call an E+M P-value. The E+M P-value based on McNemar's statistic is shown numerically to dominate previous suggestions, including partially maximised P-values as described in Berger and Sidik (2003). The latter method however may have computational advantages for large samples.