Glossary · Business Analytics

A/B Testing

also: split testing · online controlled experiments · OCE · randomized controlled trial · RCT

Definition

A/B testing is a randomized controlled experiment that splits users into a treatment and a control variant to estimate the causal effect of a change on a chosen metric. Statistical validity depends on randomization quality, sample size, novelty effect controls, and correction for multiple comparisons.

A/B testing applies the randomized controlled trial framework to product and marketing decisions. The Kohavi/Tang/Xu 2020 framing is canonical: an Overall Evaluation Criterion (OEC), random assignment, sample-size planning via minimum detectable effect (MDE), and validity guards against Simpson's paradox, novelty effects, and Twyman's law. Bayesian formulations (posterior-odds stopping rules) trade off the false-positive control of frequentist methods for faster decision velocity. Production pitfalls: SRM (sample ratio mismatch) failures, segment-level interaction effects, and the multiple-comparisons inflation that makes 5% of all tests look significant on noise alone.

Essays on this concept