# Analysis plans

A central goal of running an experiment is to use data to make decisions that
are rigorous and repeatable; an **analysis plan** is a set of choices and
parameters that will govern how Eppo translates the experiment data into
dashboards and visualizations–and thus into ship/no-ship decisions.

In general, an experimentaiton program is most effective if decisions are made in a consistent way across an entire company, and so most of the analysis plan settings can be set on the administration page. However, occasionally you may want to have different settings for certain individual experiments; for example, a website that connects homeowners to contractors is likely to have many more users who are homeowners than contractors, and therefore might use a different statistical approach for an experiment on the contractor on-boarding flow than on the homeowners' search page.

## Settings

The experiment-level analysis plan settings are on the experiment setup page.

### 1. Confidence interval method

Which analysis method to use to estimate the lift and construct the confidence interval.

### 2. Confidence level

The confidence level represents how often we want the true lift to be inside the
confidence interval. The higher the confidence **level**, the wider the
confidence **interval** needs to be to ensure that it contains the true lift
with that level of probability.

A 95% confidence level (the default) means that, for 95% of experiments, the
true lift will lie within the respective confidence intervals.^{1} Lower
confidence levels will mean *narrower* confidence intervals, which in turn means
that it is *easier* to detect a lift as being different from zero (but also more
likely that you would incorrectly flag random noise as being a true treatment
effect).

### 3. Progress bar power

The statistical power used to determine experiment progress. The higher the power, the more likely it is that a real treatment effect will be detected. Collecting more data (that is, getting a bigger sample size) will, in general, result in more power (and thus will fill up more of the progress bar), but there are diminishing returns: each additional percentage point of power requires collecting more and more additional data.

### 4. Minimum detectable effect (MDE)

The smallest non-trivial lift: what is the minimum lift you want to be able to detect? Another way of putting it would be: what is the largest lift that you would be OK missing?

This is used to power the progress bar, which shows how close you are to being powered to detect a lift of this size in the primary metric.

By default, the primary metric's MDE is used, but you can override it manually. For more on MDEs as they relate to individual metrics, see Minimum Detectable Effects.

## Considerations for setting an analysis plan

You are running an experiment in order to make a decision: should I ship the treatment? Different analysis methodologies might change:

*Which*decision you make (and thus*whether you make the right decision*)*When*you make a decision (which affects development velocity)*How*you make a decision (that is, the decision-making process)

Different methodologies put different constraints on how your team operates day-to-day, and therefore it's important to select one that is compatible with the broader organizational context (such as how velocity is traded off for quality, or any business-determined deadlines or cadences). Perhaps more importantly, though, how experiments are analyzed can dramatically affect how much value you get from running experiments, or even whether you get any value at all.

Here we zoom out to show how the parameters that make up an analysis plan translate to business priorities and constraints, which we hope will help in choosing those parameters.

### What's the best way to be wrong?

When picking an analysis methodology, it's important to think about different
ways your decision can be *wrong*:

**False positive**(also called*Type I error*): The treatment has*no*effect, but you think it does^{2}**False negative**(also called*Type II error*): The treatment has an effect, but you think it does*not*

Because you don't *know*, even after running the experiment, whether the treatment
had an effect, you don't know whether observing a nonzero lift is a
*true positive* or a *false positive*; simarly, *not* observing a lift
could be a *true negative* or a *false negative*.

Of course, for any given experiment, you either detect a difference or you
don't, and what you *want* to know is: is this difference (or lack thereof) a
*true* or *false* positive (or negative)? That is, unfortunately, not possible
to know: you can only see the data you've observed, never the underlying process
that created the data.

What you *can* do is (given some assumptions) *control* the rate of false
positives *assuming there is no effect*, or the rate of false negatives
*assuming a real effect exists*.

In general, *statistical
significance*
is about limiting the

*false*: If your treatment doesn't do anything at all, you want to make sure the random differences between groups are unlikely to be flagged as a significant metric movement.

**positive**rate^{3}

Having more *statistical power*,
on the other hand, means that you'll have a lower

*false*: If there's a real treatment effect, the more power you have the more likely you are to be able to detect a significant metric movement.

**negative**rateNote, though, that these terms don't have the same meaning if using a Bayesian analysis analysis method, although the concepts can still be useful.

### Frequentist methods: taking control

The fixed-sample
and sequential
analysis methods use the framework of
null hypothesis significance testing
to control the *false positive rate*: that is, the rate at which a non-effectual treatment
would be incorrectly flagged as causing a metric to move. This limits the risk
that you will ship treatments based on *random noise*. Since most treatments
don't have much of an effect, this is a useful protection.

These methods do not, however, inherently control the *false negative rate*:
the rate at which a treatment with a real effect will go undetected; that
requires ensuring that you have enough data (and therefore enough
power) to detect any treatment
effect that actually exists.
(Using Eppo's Sample Size Calculator
is a great way to do that.)

The biggest difference between these methods is in how flexible they are, given the guarantees: fixed-sample analysis can detect a lift more quickly, but you only have one shot to look at the results and make a decision, while sequential analysis is more forgiving and allows you to continuously check the results and make a decision at any point.

### Bayesian methods: telling you what you actually want to know

Bayesian
methods, in contrast, make no guarantees about either false
positive or false negative rates. Instead, the goal is to provide a description
of *your beliefs* about what the true lift is (meaning, how likely is any
particular lift, not just whether the lift is zero or nonzero).

Before you run the experiment, you have some *prior beliefs* about the treatment
(that is, your best guess of what the lift will be, as well as your
*level of certainty about that guess*). Once you run the experiment, you use the data you
observe to *update* your prior beliefs, resulting in a *posterior distribution*
that describes how likely you believe different lifts to be.

Although it can be disconcerting not to have the "guarantees" provided by
frequentist methods, a Bayesian would argue that those guarantees don't actually
guarantee anything useful: they can tell you how likely a true lift will be
missed or a nonexistent lift will be falsely detected, but not
*how likely a lift (or lack thereof) is to be true*.
Bayesian methods *can* tell you this–as long as you trust your prior
and your assumptions about the structure of the data.

And, importantly, while frequentist methods provide a binary structure for making decisions—an effect exists or does not—Bayesian methods allow for a more nuanced way of making decisions, which in particular is useful when sample sizes are too small to be able to detect even reasonable lifts with a frequentist method. Bayesian methods also allow you to make descisions at any time, and make it easier to tailor the level of rigor to the potential costs of being wrong: you can move fast when being wrong is cheap, and be more thorough when it is expensive.

### Being the right amount of wrong

Setting the *confidence level* determines how easy it is to flag a difference in
a metric as "significant"; thus—regardless of the analysis method—a **lower**
confidence level means you will be **more likely** to treat *random noise* as if
it were a real treatment effect. It will also mean, however, that a *real
treatment effect* will be detected **more quickly**.

Collecting **more data** will—regardless of the analysis method—mean that you
will be **less likely** to miss a real treatment effect. It also means, though,
that you will have to wait **longer** to recognize when there is *no* treatment
effect—you'll make decisions **more slowly**.

The goal for picking an analysis plan is to balance:

- How often you will be wrong in each direction (false positive or false negative)
- The
*costs*of being wrong in each direction (would you rather miss a true effect, or ship a dud?) - How long it will take to make a decision
- How easy it will be to make a decision (including how easy it is to
*communicate about*and*align on*a decision)

- For anyone used to thinking in p-values, this corresponds to a p-value of 0.05 (that is, $1 - 95\%$)↩
- "Postive" here means
*effect detected*, and "negative" means*no effect detected*; think of a diagnostic test for a disease, where "positive" means that the desease is present, and "negative" means it is not. In particular, a "positive" result in this sense would be*observing a difference, in*. That is, having a confidence interval that is entirely above**either**direction, between treatment and control*or*below zero would be considered a "positive" result in the sense of*false (or true) positive (or negative*.↩ - Specifically, if your confidence level is set to 95%, then a statistically significant result should happen no more than 5% (i.e. 1 - 95%) of the time in an A/A test that compares different groups receiving identical experiences.↩