Do Bayesian A/B Testing With Me, Bro

Shout-outs

If you work in growth, you will probably be involved in A/B or multivariate testing. I’ve run my fair share and have learned some lessons on what to do and what not to do. In this post, I will share a step-by-step process of doing a multivariate test using the bandit R package and a Bayesian approach.
This post is based on a collection of ideas and methods from other blogs, and therefore, is not entirely original. Nevertheless, my goal is to present an easy-to-follow guide for A/B/C/D testing with tools freely available to anyone.
It’s only fair to begin the post by acknowledging the blogs and sources that have been used for this post.

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How Much is Your Chair Worth?

Working in finance has had its perks – and one of them was receiving good advice that no one ever follows: “Do not to become full of yourself after enjoying some success.” To drive this piece of advice home, more experienced folks would often ask someone who was being overconfident, “How much is your chair worth?”

Let me elaborate.

Say, you’re a trader on Wall Street. You suspect the stock market is about to fall and you call your clients to tell them to sell their position. You also short the market from your own trading book. The stock exchange tanks and you make a hefty sum for the institution you work for, your clients, and probably even yourself when bonus time comes around. At this point in the story, you start believing you did great and deserve all the credit.

You shouldn’t.

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