Dataford
Interview QuestionsInterview GuidesExperiencesCoaching
New
Pricing
Get started
Dataford
Popular roles
Software EngineerData AnalystData ScientistData EngineerBusiness AnalystAI EngineerMachine Learning EngineerProduct Manager
Browse
Browse All RolesEvery role hub, from analyst to MLBrowse All CompaniesCompany-specific interview loopsAll Interview GuidesThe full guide library
Top questions by role
Software EngineerData AnalystData ScientistData EngineerBusiness AnalystAI EngineerMachine Learning EngineerProduct Manager
Top questions by skill
SQLPythonStatisticsMachine LearningA/B TestingSystem DesignGenerative AIProduct SenseMetricsBehavioral
Browse all questions →Try a mock interview
Experiences
Practice
Mock InterviewsTimed interview simulations with feedbackCoaching1:1 coaching with people at your target companiesSuccess PathYour 6-week structured planModulesCurated lessons by topicWebinarsTalks from ex-Big Tech data leadsPlaygroundA free-form scratch editor
Learn
BlogInterview strategy and career adviceTech Job Market ReportHiring trends across data and AI rolesFor UniversitiesDataford for career centersAbout DatafordWho we are and how we build
Pricing
Build my plan

A/B Test vs Observational Lift

EasyStatistics & Probability00:00
Practice interviewer
In session
5 left
00:00

Your question is A/B Test vs Observational Lift. Take a moment with it on the right.

Talk me through your thinking if you like. When you're confident, submit your answer and I'll grade it like a real screen (7/10 or better passes).

You need to log in / sign up to chat or submit.

Problem

Business Context

StreamCart changed its mobile checkout button color and wants to know whether the change truly improved purchase conversion. The team has two sources of evidence: a randomized A/B test and a prior observational analysis from users who self-selected into the new experience.

Problem Statement

Explain the difference between A/B testing and observational analysis using the data below, then quantify what each approach suggests about the checkout change.

Given Data

1) Randomized A/B test

GroupUsersPurchasesConversion Rate
Control (old button)8,00088011.0%
Treatment (new button)8,20098412.0%

2) Observational analysis from a prior soft launch

SegmentOld Button UsersOld PurchasesOld RateNew Button UsersNew PurchasesNew Rate
High-intent users1,50027018.0%4,00080020.0%
Low-intent users6,5006109.38%2,0001849.2%
Overall8,00088011.0%6,00098416.4%

Use a significance level of α=0.05\alpha = 0.05α=0.05.

Requirements

  1. Compute the estimated lift from the randomized A/B test.
  2. Run a two-proportion z-test for the A/B test and state whether the result is statistically significant.
  3. Compute a 95% confidence interval for the A/B test lift.
  4. Compare the A/B test estimate with the observational overall lift.
  5. Explain, using the segment data, why the observational result may be biased and why A/B testing is better for causal inference here.

Assumptions

  • Randomization in the A/B test was implemented correctly.
  • Each user appears once and outcomes are independent.
  • The normal approximation is appropriate because sample sizes are large.