A city launches a new driver incentive that guarantees a minimum hourly earning during peak periods. Design the evaluation plan to decide whether the program should be expanded to other cities.
Practice against the follow-up probes
- What are your objectives and guardrails across riders, drivers, and the platform — and which one is the decision metric?
- Would you randomize at the rider level, driver level, use switchbacks, geo experiments, difference-in-differences, or synthetic control? Why?
- Drivers can see the incentive and migrate across zones or shift their hours in anticipation. How does that contaminate your design?
- How do you estimate incrementality — supply that exists because of the program — rather than just measuring that supply went up?
- The program has a fixed budget. How does that change what "success" means?
Show answer guide
What the interviewer is probing
Whether the candidate recognizes this as an interference problem before choosing a method: driver-level randomization is the intuitive answer and it's wrong here, because treated and control drivers compete in one marketplace and the incentive changes behavior of both. Strong candidates frame the business decision first (expand or not, at what cost per incremental supply hour), pick a design that matches the interference structure, and are honest about what each design cannot identify.
Strong answer outline
- Frame the decision: expansion is a cost-effectiveness question — dollars per incremental supply-hour during peak, and downstream effects on rider wait times, completed trips, and driver retention. Guardrails: driver earnings dispersion, off-peak supply cannibalization, rider price effects.
- Rule out naive designs aloud: driver-level randomization suffers spillovers (control drivers face more competition, inflating apparent effects); pre/post comparison confounds seasonality and city trends.
- Prefer designs matching the interference structure: geo-randomization at the city or zone-cluster level if enough units exist; switchbacks (time-based alternation) if the effect onset/decay is fast; synthetic control or diff-in-diffs against comparable cities when only one launch city exists — which is the realistic case here.
- Name anticipation and learning effects: announce dates create pre-period contamination; drivers take time to respond, so define a burn-in and an effect window.
- Incrementality: compare supply-hours against the counterfactual, then decompose — new drivers activated vs. existing drivers shifting hours from off-peak (cannibalization) vs. hours shifted from neighboring zones (displacement). Only the first is cleanly incremental.
- End with a decision rule: expand if cost per incremental peak supply-hour beats the alternative levers (e.g. surge subsidy) at comparable guardrail impact, validated in 2-3 structurally different cities before general rollout.
The underlying concept
The Stable Unit Treatment Value Assumption (SUTVA) — that one unit's treatment doesn't affect another unit's outcome — fails almost everywhere in a marketplace, because participants compete for shared demand and supply. When SUTVA fails, the choice of randomization unit is the real design decision: you must randomize at the level that contains the interference (zones, cities, time blocks), even though this slashes your sample size and statistical power. That power-vs-validity trade-off, and the discipline of measuring incrementality against a counterfactual rather than a before/after, is the core of applied marketplace causal inference.
Source
Distilled Prep canon — curated from Uber's public work on marketplace experimentation and causally-informed optimization.