\documentclass{article}
\usepackage[utf8]{inputenc}
\begin{center}
\begin{tabular}{ |c|c|c| }
\hline
{} & \multicolumn{2}{|c|}{Decision Conclusion from hypothesis test)} \\
\hline
True Population State (Unknown) & Reject $H_0$ & Retain $H_0$ \\
\hline
Means are equal ($H_0$ is true) & Incorrect decision: Type I error & Correct decision \\
\hline
Means are unequal ($H_0$ is false) & Correct decision & Incorrect decision: Type II error \\
\hline
\end{tabular}
\end{center}
I don't wanna Incorrect decision: Type I error. Instead, I want
Incorrect decision:
Type I error
The 'c' column specifier will not wrap long lines of text. You have to break it manually and put the extra text on the next row. Alternately, you can use the 'p' column specifier and get better results.
Since your question is bout getting a 'prettier table, as is commonly suggested, avoid using both horizontal and vertical lines in a table. I am attaching my attempt:
Nice, but your example produces an overfull \hbox of 57.69922pt (you could add package showframe to visualize the overlapping). Here another example without overfull \hbox:
\documentclass{article}
\usepackage[utf8]{inputenc}% Only needed for outdated LaTeX distributions
\usepackage{booktabs}
\usepackage{tabularx}
\usepackage{ragged2e}
\begin{document}
\begin{center}% Don't use this inside a table environment (instead use
% \centering command)
\renewcommand{\arraystretch}{1.3}
\begin{tabularx}{\linewidth}{@{}l*{2}{>{\RaggedRight}X}@{}}
\toprule
{} & \multicolumn{2}{>{\hsize=\dimexpr2\hsize+2\tabcolsep\RaggedRight}X}{Decision Conclusion from hypothesis (test)} \\
\midrule
True Population State (Unknown) & Reject $H_0$ & Retain $H_0$ \\
Means are equal ($H_0$ is true) & Incorrect decision:\par Type I error & Correct decision |-> \\
Means are unequal ($H_0$ is false) & Correct decision & Incorrect
decision: \par Type II error \\
\toprule
\end{tabularx}
\end{center}
\end{document}
Sorry, but I can no longer participate here as the administrator is trampling on my wishes on one of his other platforms.