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arXiv · 2610.41294

The Double Diagonal Estimator: Reducing Bias in Two-Sided Marketplace Experiments

Saanvi Chawla·Vasilis Syrgkanis
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Abstract

Interference between participants in two-sided marketplace experiments can severely bias conventional A/B tests. While two-sided randomization (TSR), which randomizes both supply and demand, enables estimators that mitigate this bias, existing analyses offer limited guidance on which estimator to prefer for the balanced market conditions common in practice, as they largely focus on extreme supply- or demand-constrained regimes. We introduce the Double Diagonal (DD) estimator, a novel method for interference-robust treatment effect estimation. The DD estimator contrasts the outcomes of treated-treated and control-control pairs and uses the off-diagonal interactions (treated-control and control-treated) to correct for interference-induced bias. We provide the first theoretical comparison between the DD and the standard naive TSR (TSRN) estimator under a simplifying mean-field market model, proving two key results: (i) DD's bias is strictly smaller than the standard estimator's below a critical threshold of the outside-option parameter; in particular, DD's bias is smaller whenever the outside option is at most twice as attractive as platform options; and (ii) the two estimators exhibit biases in opposite directions, with DD underestimating and the standard estimator overestimating the true effect, respectively. Extensive numerical experiments in realistic market settings--spanning heterogeneous treatment effects, supply-demand imbalances, and varied market structures--corroborate our theoretical findings. Across a wide range of configurations, the DD estimator demonstrates the lowest bias, establishing it as a robust and often superior choice for reliable experimentation in two-sided marketplaces.

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Saanvi Chawla, Vasilis Syrgkanis. 2026-10-30. The Double Diagonal Estimator: Reducing Bias in Two-Sided Marketplace Experiments. https://arxiv.org/abs/2610.41294

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