Explain Type I vs. Type II Errors in A/B Testing
A/B Testing Errors and Estimation Under Skewed Metrics
Context
You are analyzing an A/B experiment for a product feature. You need to explain the statistical error types and defend thresholds you would use. The primary metric can be heavy-tailed (e.g., time spent, revenue per user) with outliers.
Tasks
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Define and contrast Type I and Type II errors in A/B testing, and explain how you would choose acceptable levels (α and β/power) in this context.
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If the metric distribution is highly skewed with outliers, describe how you would estimate the treatment lift and construct a confidence interval. Discuss appropriate methods (e.g., non-parametric tests, bootstrapping, or transformations) and when you would use them.
Constraints & Assumptions
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Preserve the scope, facts, inputs, and requested outputs from the prompt above.
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If the prompt leaves a detail unspecified, state a reasonable assumption before relying on it.
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Keep the answer interview-ready: concise enough to present, but concrete enough to implement or evaluate.
Clarifying Questions to Ask
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Clarify the random variables, distributional assumptions, independence assumptions, and desired output.
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Show enough derivation for the interviewer to follow the reasoning.
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Explain how you would validate the result with simulation or sensitivity checks.
What a Strong Answer Covers
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A correct setup with definitions, formulas, and boundary conditions.
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A step-by-step derivation or estimation plan.
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Interpretation of the result, including uncertainty and practical limitations.
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Checks for assumptions, edge cases, and numerical stability.
Follow-up Questions
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How would the result change if the assumptions were relaxed?
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Can you verify the answer with a simulation?
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What is the most likely source of estimation error?