According to curriculum:

"A **return distribution of skilled managers that is highly distinct from the return distribution of unskilled managers:**

**-> high opportunity cost of not hiring the skilled managers"** (NB: so, this would be a Type II)

“The smaller the difference in sample size and distribution mean and the **wider the dispersion of the distributions, the smaller the expected cost of the Type I or Type II error.**

More- efficient markets are likely to exhibit **smaller differences in the distributions of** skilled and unskilled managers-> **lower opportunity cost** of retaining unskilled manager and **lower the cost of hiring an unskilled manager.**”

Isn´t this a contradiction? Shouldn´t the rule be:

Wide dispersion (high differences skilled vs unskilled) -> high cost of Type I or II

Narrow distribution (low differences skilled vs unskilled) -> low cost of Type I or II

Thanks!

C