Factorial Designs

Week 5 lecture 1

Whats factorial designs

Two or more independent variables are manipulated in a single experiment They are referred to as factors The major purpose of the research is to explore their effects jointly Factorial design produce efficient experiments, each observation supplies information about all of the factors
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A simple example
Research problem
The effect of start and external reference prices on value judgments in Internet auction

Four group of bidders

Start price Low Reference Not available Group 1 price Catalogue price Group 3 high Group 2 Group 4

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Factorial Designs

2 x 2 factorial design
Independent variables (factors)
start price
Two different levels: low (20% below cv), high (10% below cv)

Reference price
Two different levels: not available, catalog value(cv)

2 x 2 factorial design
Number of numbers tells how many factors Number values tell how many levels The result of multiplying tells how many treatment groups that we have in a factorial design
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Design notation
Whats the number of factors, levels and groups in a 3 x 4 factorial design? Design notation
R R R R X11 X12 X13 X14 O O O O

Dependent variable final selling prices

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Main effect
The main effect of a factor are contrasts between levels of one factor averaged over all levels of another factor Start price One possible results
Low Reference Not available price Catalogue price Average 13.07 12.10 12.59 high 13.71 12.51 13.11 average 13.39 12.31

Main effect of Reference price is 1.08 = 13.39 12.316 09/04/03 Factorial Designs

Main effect illustrations

ain effect of reference rice
no P 14 13.5 Mean selling rice 13 12.5 12 11.5 11 lo tart rice ig 12.1 3.07 12.51

ain effect of start rice

14 o start rice ig start rice

P 13.71
13.5 reference rice 13 12.5 12 11.5 11

13.71 13.07 12.51 12.01

No P ean selling rice

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Factorial Designs

Interaction effect
An interaction effect exists when differences on one factor depend on the level of another factor How do we know if there is an interaction in a factorial design?
Statistical analysis will report all main effects and interactions. If you can not talk about effect on one factor without mentioning the other factor Spot an interaction in the graphs of group means whenever there are lines that are not parallel there is an interaction present!
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Results with interaction effect

Start price Low Reference Not available price Catalogue price Average 12.40 12.10 12.25 high 13.71 12.51 13.11
nteraction effect
13.71 14

average 13.05 12.31

Mean selling price

nteraction as a difference in magnitude of response

Interaction contrast = (13.71-12.40) (12.51 12.10) = 1.3
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13.5 13 12.5 12 11.5 11 low 12.4 12.1

12.51

no R R

high

Start price 9

Factorial Designs

Results with interaction effect (II)

Start price Low Reference Not available price Catalogue price Average 13.07 13.40 13.24 high 13.71 12.51 13.11
Interaction

average 13.39 12.96

effect
13.71 13.4 13.07 12.51

Mean selling price

Interaction as a difference in direction of response

Interaction contrast = (13.71-13.07) (12.51 13.40) = 1.63
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14 13.5 13 12.5 12 11.5 low high

no R R

Start price 10

Factorial Designs

Factorial design analysis

Analysis of variance (ANOVA)
used to uncover the main and interaction effects of categorical independent variables on an interval dependent variable focuses on F-tests of significance of differences in group means Factorial ANOVA
analyzes one interval dependent in terms of the categories (groups) formed by two or more independents Two-way ANOVA
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Interpretation of two-way ANOVA table

Unique Method Sum of Squares (Combined) Main Effects Reference price Start price 30712.12 923.295 18430.12 2796.816 df 3 2 1 2 Mean Square 10237.374 461.648 18430.125 1398.408 6856.962 210.577 327.591 F 48.616 2.192 87.522 Sig. .000 .114 .000 .002 .000

Selling price

2-Way Interactions Model Residual Total

Reference price * start price

6.641 32.563

34284.81 58751.06 93035.87

5 279 284

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Factorial Designs

12

Factorial design variations

A three-factor example
Number of bidders High Start price Reference price Low Non Low High I V IX High II VI X low Reference price Low III VII XI High IV VIII XII

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Factorial Designs

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What are the major statistics?

Main effects of each of the three factors Three two way interactions
Number of bidders vs. reference price Reference price vs. start price Number of bidders vs. start price

One three way interactions

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Factorial Designs

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Incomplete factorial design

Leave some treatment groups empty
Number of bidders High Start price Reference price Not avail. Non Low High
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low Reference price Not avail. II V IX CV. VI X

15

CV IV VIII

I III VII

Factorial Designs

Advantages of factorial design

Factorial designs are cost efficient Factorial design may enhance external validity
External validity: to what extent research findings can be generalize to other conditions. Whenever we are interested in examining treatment variations, factorial designs should be strong candidates as the designs of choice

Factorial designs are the only effective way to examine interaction effects
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2x3 factorial design example

Research problem
Whether the structure of a decision task moderates the effects of GDSS on the patterns of group communication and decision quality in a decision making group

Unit of study
Group decision making (process and outcome)

Dependent variables
Communication pattern (qualitative measure) Decision quality (quantitative measure)
-- Adapted from the effect of group decision support systems and task structures on group communication and decision quality by Simon S K Lam, JMIS, Spring 1997 09/04/03 Factorial Designs 17

Independent variables
Level of support
GDSS support No support

Task structure
Additive task
Each group member contributes a part to the group decision

Disjunctive task
A group select one optimal solution from an array of solutions proposed by individual group members

Conjunctive task
Each group member has different information, the successful decision can only be achieved when the unique information is accurately communicated to other group members
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Research methods
Experiment with 2x3 full factorial design Subjects 216 midlevel managers from 35 diverse organization Subject assignment each treatment group contains 12 three-person decision groups
Task structure Additive Level of support
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Disjunctiv e 12 12

Conjunctiv e 12 12
19

No GSS GSS support

12 12
Factorial Designs

Research method (II)

Experimental Task
Selecting a product manager for a new division of a company.

GDSS provides
Chatting facility Multi-criterion decision model support Voting feature
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Experimental Manipulation
Manipulation of level of support Manipulation of task structure
Three piece of information:a resume, a detailed work history and a confidential character evaluation report Additive task
Each group member received all three piece of information and worked together to reach an decision

Disjunctive task
Each group member received all three piece of information, ranked the candidates individually, then decide whose ranking was optimal

Conjunctive task
Each group member received only one type of information about all candidates
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Experimental procedures
Introduction Fill out a questionnaire about background, experience Distributing information packet Randomly assign subjects to different decision groups, and decision groups to treatment groups Decision groups start to work on the recruiting task Hand in decision and fill out a questionnaire about decision making procedure and decision making environment 09/04/03 Factorial Designs 22 Measuring dependent variables

Results
Manipulation checks
Which of the following best describes how you made a decision on the task you have just finished Which of the following best describes your groups decision-making environment?

Control checks
Run statistical test to compare subjects background across all six experimental treatments

Two-way ANOVA on decision quality was conducted to test hypotheses on decision quality
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