Two-Sided Prioritized Ranking: A Coherency-Preserving Design for Marketplace Experiments

TL;DR

This paper introduces Two-Sided Prioritized Ranking (TSPR), a novel experimental design for online marketplaces that estimates price effects while maintaining platform coherency and accounting for position bias.

Contribution

TSPR is a new method that leverages position bias and randomizes both users and items to accurately estimate treatment effects without disrupting platform coherency.

Findings

TSPR reduces estimation bias compared to baseline methods.

TSPR maintains platform coherency during experiments.

TSPR achieves higher statistical power in simulations.

Abstract

Online marketplaces frequently run pricing experiments in environments where users choose from a list of items. In these settings, items compete for users' limited attention and demand, creating interference among items within a list: Changing prices for any item can affect the demand for others, biasing estimates from item-level A/B tests. Besides, a key consideration in pricing experiments is preserving platform coherency across prices and item availability. This requirement rules out experimental designs such as user-level A/B tests as they violate platform coherency. We propose Two-Sided Prioritized Ranking (TSPR) to estimate the total average treatment effect of price changes in such settings. TSPR exploits position bias in ranked search results to create variation in treatment exposure without compromising coherency. TSPR randomizes both users and items and reorders ranked lists, prioritizing treated items for one group of users and untreated items for the other. All users see the same items at consistent prices, but differ in exposure to treatment as they pay disproportionate attention across ranks. In semi-synthetic simulations based on Expedia hotel search data, TSPR outperforms baseline coherency-preserving experiment designs by reducing estimation bias and providing sufficient statistical power.