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Incentive Alignment in Online Experimentation

arXiv 2610.05922 ↗First posted 5 Oct 2026cs.GT cs.AI cs.LGcited by 0

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Abstract (arXiv)

Evaluating the causal effect of new features is a central goal for online platforms. While recent literature addresses limited testing traffic via centralized portfolio optimization, this perspective abstracts away a critical institutional reality: experimentation is operationally decentralized. The experimenters who develop new features also dictate which hypotheses to test, and they are typically rewarded based on empirical average treatment effects that are prone to upward bias. Left unchecked, this principal-agent conflict can severely erode platform value, a structural failure that conventional centralized levers, such as significance thresholds and traffic budgets, cannot resolve. By reframing experimentation as an incentive design problem, we demonstrate that two practical mechanisms, sample splitting and shrinkage, can effectively bridge this gap. Sample splitting aligns incentives perfectly at a bounded traffic cost, while shrinkage consumes no additional traffic and guarantees that interventions with negative expected effects are strictly unprofitable to field.

Key facts. No citing papers in the map yet (data through 14 Oct 2026). Builds on 10 of its 20 references that are in the map. First posted on arXiv 5 Oct 2026.

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10 of 20 references.

References · 10

  1. 2014Optimal Inference After Model Selectioncited by 67
  2. 2014Designing and Deploying Online Field Experimentscited by 18
  3. 2017Democratizing online controlled experiments at Booking.comcited by 6
  4. 2018Test & Roll: Profit-Maximizing A/B Testscited by 5
  5. 2024Sharp Results for Hypothesis Testing with Risk-Sensitive Agentscited by 4
  6. 2025Instance-Adaptive Hypothesis Tests with Heterogeneous Agentscited by 3
  7. 2020The Significance Filter, the Winner's Curse and the Need to Shrinkcited by 2
  8. 2024Optimizing Returns from Experimentation Programscited by 2
  9. 2018Optimal Testing in the Experiment-rich Regimecited by 1
  10. 2026Breaking the Winner's Curse with Bayesian Hybrid Shrinkagecited by 1

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