Related papers: Optimizing Social Utility in Sequential Experiments

Optimizing Social Utility in Sequential Experiments

URL: http://arxiv.org/abs/2605.06520v1
Date: Thu, 07 May 2026 16:28:25 GMT
Title: Optimizing Social Utility in Sequential Experiments
Abstract summary: We introduce a statistical protocol for experimentation where the product developer conducts a randomized controlled trial sequentially and the regulator partially subsidizes its cost.<n>By modeling the protocol using a belief Markov decision process, we show that the agent's optimal strategy can be found efficiently using dynamic programming.<n>We show that our protocol can be used to increase social utility by more than $35$$%$ relative to standard, non-sequential protocols.
Score: 11.795056270534287
License: http://creativecommons.org/licenses/by/4.0/
Abstract: Regulatory approval of products in high-stakes domains such as drug development requires statistical evidence of safety and efficacy through large-scale randomized controlled trials. However, the high financial cost of these trials may deter developers who lack absolute certainty in their product's efficacy, ultimately stifling the development of `moonshot' products that could offer high social utility. To address this inefficiency, in this paper, we introduce a statistical protocol for experimentation where the product developer (the agent) conducts a randomized controlled trial sequentially and the regulator (the principal) partially subsidizes its cost. By modeling the protocol using a belief Markov decision process, we show that the agent's optimal strategy can be found efficiently using dynamic programming. Further, we show that the social utility is a piecewise linear and convex function over the subsidy level the principal selects, and thus the socially optimal subsidy can also be found efficiently using divide-and-conquer. Simulation experiments using publicly available data on antibiotic development and approval demonstrate that our statistical protocol can be used to increase social utility by more than $35$$\%$ relative to standard, non-sequential protocols.

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