Auditing Marketing Budget Allocation with Hindsight Regret
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arXiv
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| Hauptverfasser: | , , |
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| Format: | Preprint |
| Veröffentlicht: |
2026
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| _version_ | 1866913075189252096 |
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| author | Pathak, Nilavra Jeunen, Olivier Lambert, Eric |
| author_facet | Pathak, Nilavra Jeunen, Olivier Lambert, Eric |
| contents | Organizations routinely make strategic budget allocations under operational constraints, but often lack a principled way to assess whether realized allocations were close to the best feasible choices in hindsight. We present a retrospective auditing framework based on hindsight regret, defined as the opportunity cost of the realized allocation relative to a constraint-faithful benchmark under the same budget and stability guardrails. The framework estimates regime-specific spend--response functions from historical logs, computes feasible hindsight allocations via constrained optimization, and propagates uncertainty through Monte Carlo evaluation to produce regret distributions, expected lift, and probability-of-improvement summaries. This separates allocation inefficiency from uncertainty in the estimated response surfaces. Experiments on real marketing allocation logs show that the framework yields interpretable post-hoc diagnostics and reveals a practical trade-off between allocation flexibility and detectability: moderate feasible reallocations often capture most measurable gain, while larger shifts move into weak-support regions with higher uncertainty. The result is a practical method for auditing historical budget decisions when online experimentation is costly or infeasible. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2604_25977 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Auditing Marketing Budget Allocation with Hindsight Regret Pathak, Nilavra Jeunen, Olivier Lambert, Eric Econometrics Artificial Intelligence Machine Learning Portfolio Management H.4.2; G.3; I.2.6; I.2.8; J.4 Organizations routinely make strategic budget allocations under operational constraints, but often lack a principled way to assess whether realized allocations were close to the best feasible choices in hindsight. We present a retrospective auditing framework based on hindsight regret, defined as the opportunity cost of the realized allocation relative to a constraint-faithful benchmark under the same budget and stability guardrails. The framework estimates regime-specific spend--response functions from historical logs, computes feasible hindsight allocations via constrained optimization, and propagates uncertainty through Monte Carlo evaluation to produce regret distributions, expected lift, and probability-of-improvement summaries. This separates allocation inefficiency from uncertainty in the estimated response surfaces. Experiments on real marketing allocation logs show that the framework yields interpretable post-hoc diagnostics and reveals a practical trade-off between allocation flexibility and detectability: moderate feasible reallocations often capture most measurable gain, while larger shifts move into weak-support regions with higher uncertainty. The result is a practical method for auditing historical budget decisions when online experimentation is costly or infeasible. |
| title | Auditing Marketing Budget Allocation with Hindsight Regret |
| topic | Econometrics Artificial Intelligence Machine Learning Portfolio Management H.4.2; G.3; I.2.6; I.2.8; J.4 |
| url | https://arxiv.org/abs/2604.25977 |