When we are forced to guess whether an observation is a signal (reflecting something real) or noise (the messiness in our observations), we have to apply a cutoff. In the jargon of signal detection, it’s called the criterion or response bias, symbolized as β (beta). If an observation is above the criterion, we say “Yes,” acting as if it is a signal (whether or not it is, which we can’t know); if it is below, we say “No,” acting as if it is noise:
