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hardData Scientist interview question

Why are A/B tests tricky in a two-sided marketplace like a ride-hailing app, and how would you handle it?

What the interviewer wants to hear

  • Interference: treatment and control share the same supply
  • User-level randomisation can be biased
  • Switchback tests by time and region, or cluster randomisation
  • Trade-off between bias and statistical power
  • Measure both sides of the market

Model answer

In a marketplace, riders in treatment and control compete for the same drivers. If a new pricing feature makes treatment riders book more, they take drivers away from control riders, so control gets worse and the measured lift is exaggerated. This breaks the assumption that one user outcome does not depend on another group. To reduce interference, I randomise at a level where spillover is small. Switchback experiments alternate treatment and control for a whole city or zone over time windows, like 30 minutes, so the whole market is in one state at a time. Cluster randomisation by city or region also works. The trade-off is fewer independent units, so less power and wider confidence intervals; I need longer tests and careful variance estimation. I would also measure both sides: rider conversion and wait times, and driver earnings and utilisation.

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