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Optimal personalized treatment rules for marketing interventions: A review of methods, a new proposal, and an insurance case study


  • Leo Guelman

    (Royal Bank of Canada, RBC Insurance)

  • Montserrat Guillen

    (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona)

  • Ana M. Pérez-Marín

    (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona)


In many important settings, subjects can show significant heterogeneity in response to a stimulus or treatment. For instance, a treatment that works for the overall population might be highly ine ective, or even harmful, for a subgroup of subjects with specific characteristics. Similarly, a new treatment may not be better than an existing treatment in the overall population, but there is likely a subgroup of subjects who would bene t from it. The notion that one size may not fit all is becoming increasingly recognized in a wide variety of fields, ranging from economics to medicine. This has drawn signi cant attention to personalize the choice of treatment, so it is optimal for each individual. An optimal personalized treatment is the one that maximizes the probability of a desirable outcome. We call the task of learning the optimal personalized treatment "personalized treatment learning". From the statistical learning perspective, this problem imposes some challenges, primarily because the optimal treatment is unknown on a given training set. A number of statistical methods have been proposed recently to tackle this problem. However, to the best of our knowledge, there has been no attempt so far to provide a comprehensive view of these methods and to benchmark their performance. The purpose of this paper is twofold: i) to describe seven recently proposed methods for personalized treatment learning and compare their performance on an extensive numerical study, and ii) to propose a novel method labeled causal conditional inference trees and its natural extension to causal conditional inference forests. The results show that our new proposed method often outperforms the alternatives on the numerical settings described in this article. We also illustrate an application of the proposed method using data from a large Canadian insurer for the purpose of selecting the best targets for cross-selling an insurance product.

Suggested Citation

  • Leo Guelman & Montserrat Guillen & Ana M. Pérez-Marín, 2014. "Optimal personalized treatment rules for marketing interventions: A review of methods, a new proposal, and an insurance case study," Working Papers 2014-06, Universitat de Barcelona, UB Riskcenter.
  • Handle: RePEc:bak:wpaper:201406

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    References listed on IDEAS

    1. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    2. Yingqi Zhao & Donglin Zeng & A. John Rush & Michael R. Kosorok, 2012. "Estimating Individualized Treatment Rules Using Outcome Weighted Learning," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 107(499), pages 1106-1118, September.
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    5. Reynold E. Byers & Kut C. So, 2007. "Note--A Mathematical Model for Evaluating Cross-Sales Policies in Telephone Service Centers," Manufacturing & Service Operations Management, INFORMS, vol. 9(1), pages 1-8, January.
    6. Martin Englund & Jim Gustafsson & Jens Perch Nielsen & Fredrik Thuring, 2009. "Multidimensional Credibility With Time Effects: An Application to Commercial Business Lines," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(2), pages 443-453, June.
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    Cited by:

    1. Robin Gubela & Artem Bequé & Stefan Lessmann & Fabian Gebert, 2019. "Conversion Uplift in E-Commerce: A Systematic Benchmark of Modeling Strategies," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 18(03), pages 747-791, May.
    2. Shaowen Hua, 2016. "WhatMakes Underwriting and Non-Underwriting Clients of Brokerage Firms Receive Different Recommendations? An Application of Uplift Random Forest Model," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 5(3), pages 42-56, April.
    3. Gross, Samuel M. & Tibshirani, Robert, 2016. "Data Shared Lasso: A novel tool to discover uplift," Computational Statistics & Data Analysis, Elsevier, vol. 101(C), pages 226-235.
    4. Mercedes Ayuso & Montserrat Guillen & Jens Perch Nielsen, 2019. "Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data," Transportation, Springer, vol. 46(3), pages 735-752, June.
    5. Manuela Alcañiz & Aïda Solé-Auró, 2018. "Ageing and health-related quality of life: evidence from Catalonia (Spain)," Working Papers 2018-01, Universitat de Barcelona, UB Riskcenter.

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    personalized treatment learning; causal inference; marketing interventions;
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