Professional Documents
Culture Documents
MRKT 451
Experimentation I
February 2, 2010
Class Outline
• Causal inference
• Experiment definitions
• Validity in experimentation
• Selected experimental designs
• Critique an experiment
What is causality?
5
Causal Inference
• Example:
– Do Christmas card cause Christmas?
– Do Storks bring babies?
An experiment attempts to check these three criteria
for causality by:
3. measuring association.
The Experimental Procedure
Randomly sample
100 consumers.
Randomly Assign
• Definitions
– Factor: Explicitly manipulated variable.
– Levels: The values a factor is allowed to take.
– Treatment: Combined levels of factors that an individual is
exposed to.
– Control Group: No treatment.
– Measurement: Recording of response.
– Subject: Object of treatment.
Experiments: Effects
• Effects
– Treatment effects: Effects of interest
• Manipulation check
– Experimental effects: Unintended effects
• Impact of measurement
– Other-variable effects: Effects of ignored extraneous
variables
– Randomness
Validity
• Internal validity
– The extent to which the observed results are due to the experimental
manipulation.
– Problems: Being able to come up with explanations for changes in y that have
nothing to do with a falsification argument to falsify the statement that the change
in y was caused by the change in x (Most common problem - “selection bias”: the
two groups are not at parity)
• External validity
– The degree to which the experimental results are likely to hold beyond the
experimental setting.
– Problems: x, y, p being poor proxies for X, Y, P.
• Passage of time
– History effect (H): Events external to the experiment that
affect the responses of the people involved in the
experiment.
– Maturation effect (M): Changes in the respondents that are
a consequence of time, such as aging, getting hungry, or
getting tired.
Threats to Internal Validity
• Testing
– Testing effect (T): The fact that someone has been
measured previously might effect their future behavior
(e.g., desire to be consistent).
– Interactive Testing Effect (IT): The prior measurement
affects perceptions of the experimental variable (e.g.,
question about coke’s brand awareness affects processing
of coke’s advertising).
Threats to Internal Validity
• Data
– Instrument variation (IV): The method used to collect data
changes within the experiment (e.g., questionnaire,
interviewer, etc.).
– Statistical regression (SR): Regression towards the mean.
If an event is extreme it is likely to revert towards the mean
on its next occurrence (e.g., salesperson had an
exceptional year).
Threats to Internal Validity
• Sample
– Selection bias (SB): If units self-select themselves into the
treatment and control groups then this is of serious
concern if the selection reason is related to the outcome of
interest.
– Experimental Mortality (EM): The sample becomes
unrepresentative.
– Differential Experimental Mortality (DEM): Mortality may be
different across groups.
Threats to External Validity
Effect: O2 - O1 = E + B = E + H + M + T + TI + IV + EM
Before-After Design With Control Group (Two Group
Pre-test/Post-test Design)
• Factorial Design
– We test the effect of the manipulation of 2 or more
treatments at one time in which every level of each factor
is observed with every level of every other factor.
Factorial Design
• Example:
• Price: 3 levels ($2.0, $1.75, $1.50)
• Advertising: 2 levels (None and Some)
• Coupons: 2 levels (No and Yes)
• Benefits
– Economies of Scale
– Interaction Effects
– Greater statistical power
Interactions
Mean response
Factor B, Level 1
Factor B, Level 2
Factor A
Level 1 Level 2
Presence of Interaction: 2 x 2 Example
Cross over Spread
Mean response Mean response
Factor B,
Factor B, Level 1
Level 1
Factor B, Factor B,
Level 2 Level 2
Factor A Factor A
Level 1 Level 2 Level 1 Level 2
Fractional Factorial Design
• Randomization
• Matching
• Blocking
Randomization
• Example
– In an experiment, the objective is to test the effectiveness
of three types of display racks for supermarket
merchandising.
– These are end-aisle displays, stand-alone racks, and
check-out stand racks.
– The racks are to be tested in both small and large
supermarket stores.
Blocking
• Example
– Treatment: 3 Types of Racks.
– Blocks: 2 Types of Stores.
• Between-subjects design
– Each subject receives only one treatment.
– Comparisons are made between groups of different
subjects.
• Within-subjects design
– Subject receives more than one treatment.
– Comparisons are made across multiple measures on the
same subject.
Within or Between Subjects?