English

Auditing Marketing Budget Allocation with Hindsight Regret

Econometrics 2026-05-01 v2 Artificial Intelligence Machine Learning Portfolio Management

Abstract

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.

Keywords

Cite

@article{arxiv.2604.25977,
  title  = {Auditing Marketing Budget Allocation with Hindsight Regret},
  author = {Nilavra Pathak and Olivier Jeunen and Eric Lambert},
  journal= {arXiv preprint arXiv:2604.25977},
  year   = {2026}
}

Comments

6 pages, 8 figures

R2 v1 2026-07-01T12:39:50.658Z