Decision making in a data-driven world
The MIT press published a book by Michael Luca, Associate Professor at Harvard University, and Max Bazerman, Jesse Isidor Straus Professor at Harvard University, on the ‘Power of Experiments’ in a data-driven world in March 2020. The authors state that no data-driven (tech) company would make any major changes to its platform without first running experiments to understand how they would influence user behaviour. In this book, the authors explain the importance of experiments for decision making in a data-driven world.
Successful experiments can be both beneficial for businesses and governments. For instance, experiments can save companies money — eBay, for example, discovered how to cut almost 50 million euros from its yearly advertising budget — or bring to light something previously ignored – as when Airbnb was forced to confront rampant discrimination by its hosts. Also, governments can use different ways to influence or “nudge” behaviour ranging from voter apathy to school absenteeism.
Thus, (open) data derived from experiments can improve decision making. Experiments offer the opportunity to trial different strategies and measure the influence on user behaviour. As big technology companies derive some of their successes from successful experiments, these techniques could also prove effective for small and medium sized enterprises and governments.
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