Budgeted Multi-Source Counterfactual Annotation for Off-Policy Evaluation
Authors: Biao Xiang, Ali Eshragh, Yuexing Li, Kai Wang
Organizations: Pennsylvania State University, State College, PA · Johns Hopkins Carey Business School, Washington, DC · International Computer Science Institute, Berkeley, CA · Georgia Institute of Technology, Atlanta, GA
Off-policy evaluation (OPE) estimates the value of a target policy from logged data, but limited behavior-policy coverage can force high-variance reweighting or reward-model extrapolation. Counterfactual annotations can add evidence about unobserved actions, yet practical sources, including domain experts and large language models (LLMs), may be costly, biased, or noisy. We study budgeted acquisition of such annotations for contextual-bandit OPE. Given source-specific costs and error profiles, we formulate an integer allocation problem over context-action pairs and annotation sources to minimize the component of estimator variance that depends on the annotation plan. We characterize when annotations are valuable through a first-annotation threshold and local annotation-value regimes. For the coupled multi-source problem, we develop a majorization-minimization algorithm with dynamic-programming subroutines that monotonically improves the objective. Experiments in synthetic clinical and LLM-annotated education bandits show that our allocation method reduces fixed-profile mean squared error (MSE) by 20.58% and 10.77%, respectively, relative to no annotation.
Figures & tables
Regime
Excess variance
Bias condition
Best local action
I
Δ≥σ2
ε2≥2nfησg2
no annotations (n=0)
II
Δ<σ2
ε2>2nfησg2
compare ⌊n∗⌋,⌈n∗⌉ , capped by feasibility
III
Δ≤σ2
ε2≤2nfησg2
add as many as feasible
IV
Δ>σ2
a: ε2<nfησ2
large batch needed to improve over n=0
Δ>σ2
b: nfησ2≤ε2<2nfησg2
no annotations (n=0)
Table 1 : Conditions and local allocation decisions for η>0 , excluding the constant-objective case.
Source ID
Type
Bias ( εk )
Excess Variance ( Δk )
Cost ( ck )
1
Low Bias Low Variance
2.0
6.0
20.0
2
Low Bias High Variance
2.0
48.0
5.0
3
High Bias Low Variance
5.0
3.0
10.0
4
High Bias High Variance
5.0
48.0
1.0
Table 2: Configuration of annotation sources.
Figure 1 : Scaled mean squared error (MSE) V and the allocation-dependent components J1 , J2 , and J3 versus the number of annotations for the four annotation sources in Table 2 . Shaded bands show ±1 standard deviation over 100 environments.
Figure 2 : Scaled mean squared error (MSE) V(n) for each active source subset. Bars are grouped by the number of available sources; the dashed line is the no-annotation baseline V(0)=84.23 .
Setting
No ann.
Greedy (cost-aware)
Greedy (max-gain)
MM
MM (greedy init)
ASSISTments
88.608
79.198
79.707
79.062
79.062
Original synthetic
84.234
69.275
67.078
66.901
66.8075
I/IV-focused synthetic
84.234
72.644
71.718
70.663
70.720
Table 3: Scaled MSE of allocations from MM and greedy baselines.
Method
Mean gap (%)
Std. gap (%)
Median gap (%)
Max gap (%)
Greedy (max-gain)
0.30
0.30
0.23
0.98
Greedy (cost-aware)
3.67
3.12
3.37
17.38
MM
0.31
0.27
0.26
1.08
MM (greedy init.)
0.05
0.07
0.02
0.26
Table 4: Relative MSE gap to the certified small-instance optima.
Appendix figures & tables11 assets
Supplementary material from the paper’s appendix.
Appendix
Figure 3 : Scaled mean squared error (MSE) V(n) for each active source subset under the proposed majorization-minimization (MM) algorithm . Compared with Figure 2 , the single-source bars (red) are now obtained by optimization rather than uniformly random allocation; the multi-source bars are unchanged.
Figure 4 : Convergence trace of scaled mean squared error (MSE) V(n(t)) across majorization-minimization (MM) iterations on the synthetic clinical bandit. Different colors mark the active source subset; the tuple annotated at selected iterations records the allocation [n1,n2,n3,n4] across Sources 1–4 in Table 2 .
ID
Problem Type
Original
Median RT
IQR (s)
Correct Rate
Count
0
algebra
No
11.7 s
[5.1,30.1]
0.381
128,221
1
algebra
Yes
27.0 s
[11.3,63.3]
0.678
3,367,980
2
choose_1
No
8.1 s
[4.3,17.7]
0.812
127,222
3
choose_1
Yes
16.1 s
[7.5,39.0]
0.705
1,719,882
4
choose_n
No
11.2 s
[5.1,19.4]
0.600
295
5
choose_n
Yes
13.3 s
[7.6,27.9]
0.788
11,300
Appendix
Table 5: Action space of the ASSISTments environment.
Figure 5 : Ground-Truth reward Left: distribution of Ground-Truth Rewards Middle: heatmap of factual context-action pair data Right: influence of Time-efficiency discount on the total reward
Figure 6 : Prompt template used for all three large language models (LLMs) on the ASSISTments environment. Bracketed headers [[ ## …## ]] follow the section-delimiter style of Mandyam et al. [4] ; { curly_braces } denote per-pair fields populated from precomputed pandas lookups. Each batch contains 10 pairs; 20 independent queries at temperature 0.8 are issued per (s,a) .
Source
mean∣ε^k∣
median∣ε^k∣
meanσ^k
Total API cost
Gemini-2.5-Flash
1.09
0.77
0.53
1.14$
GPT-4o-mini
0.83
0.57
0.44
\mathbf{\0.48}$
GPT-o3-mini
0.96
0.62
0.55
37.26$
Claude-Haiku-4.5
0.86
0.56
0.28
8.11$
Appendix
Table 6 : LLM annotation quality on ASSISTments. Bias and variability are computed after converting predicted response times to rewards. The cost column reports the total API cost for the 20,000 predictions used to estimate each model’s empirical bias and variability; the allocation experiment uses the corresponding per-prediction cost.
Figure 7 : Variance objective J(n) for each active LLM source subset under uniformly random allocation. Bars are grouped by the number of available sources; the dashed line is the no-annotation baseline J(0)=88.61 .
Figure 8 : Variance objective J(n) for each active LLM source subset under the proposed MM algorithm
Figure 9 : Convergence trace of J(n(t)) across MM iterations on ASSISTments. The tuple at each highlighted iteration denotes the optimal allocation across [ Gemini-2.5-Flash , Claude-Haiku-4.5 , GPT-4o-mini ]. The algorithm heavily favors GPT-4o-mini due to its low empirical bias and high cost-efficiency, while utilizing Claude-Haiku-4.5 more conservatively because of its higher API cost.
Dataset
Method
Gap to Gurobi lower bound
Runtime (s)
Synthetic
Greedy (max-gain)
0.6863%
0.0314
Synthetic
Greedy (cost-aware)
3.9843%
0.0562
Synthetic
MM
1.0474%
8.2390
Synthetic
MM (greedy init.)
0.2807%
5.2657
Synthetic
Gurobi incumbent
0.1258%
3600.6957
ASSISTments
Greedy (max-gain)
0.8216%
1.0222
Appendix
Table 7 : Solver benchmarks and runtimes for the Synthetic and ASSISTments environments.
Method
Synthetic
ASSISTments
Best optimized single source
17.86%
8.30%
Greedy (max-gain)
18.43%
7.86%
Greedy (cost-aware)
14.39%
8.46%
MM
18.67%
8.46%
MM (greedy init.)
19.13%
8.47%
Appendix
Table 8 : Mean relative reduction in empirical mean squared error (MSE) over 30 pilot replications. For each pilot, MSE is estimated from 50 independent final off-policy value estimates.
Offline reinforcement learning and off-policy evaluation evaluates dynamic treatment rules based on retrospectively collected data prior to deployment. In recent AI applications, state and reward information is recorded as complex text or image, which recent AI advancements such as LLM-as-a-judge can label with unknown bias. Expert annotation may be available but at a higher cost. For example, safety classification via cheap but imperfect classifiers vs. expensive expert review. We show how a limited budget for ground-truth data-annotation can be used via doubly-robust OPE with missing rewards, and we optimize variance-optimal annotation probabilities for sequential off-policy evaluation, where the target policy value is estimated from annotated data. We characterize the optimal annotation probabilities for sequential forward-monotone annotation protocols, and provide a feasible batch-adaptive implementation. Our work is motivated by a collaboration with a homelessness services nonprofit that writes casenotes for individuals over time. Our method can be used to unlock trustworthy inference from casenote data and answer new inferential questions such as: how does expanding outreach effort over time affect progress towards a housing application and improvement in housing placement? In simulations and on two real datasets - casenotes from the nonprofit and human-preference votes from LMArena - we see reductions in RMSE of 34-65% for housing placement and 17-68% for progress towards a housing application at budgets of 40% of full annotation and above, and by 55-62% at every budget on LMArena.
Woojin Chae, Ezinne Nwankwo, Haitong Qin +1
University of Southern California · University of California, Berkeley · University of Washington, Seattle
Off-Policy Evaluation and Learning (OPE/L) in contextual bandits is rapidly gaining popularity in real systems because new policies can be evaluated and learned securely using only historical logged data. However, existing methods in OPE/L cannot handle many challenging but prevalent scenarios such as few-shot data, deterministic logging policies, and new actions. In many applications, such as personalized medicine, content recommendations, education, and advertising, we need to evaluate and learn new policies in the presence of these challenges. Existing methods cannot evaluate and optimize effectively in these situations due to the notorious variance issue or limited exploration in the logged data. To enable OPE/L even under these unsolved challenges, we propose a new problem setup of Cross-Domain OPE/L, where we have access not only to the logged data from the target domain in which the new policy will be implemented but also to logged datasets collected from other domains. This novel formulation is widely applicable because we can often use historical data not only from the target hospital, country, device, or user segment but also from other hospitals, countries, devices, or segments. We develop a new estimator and policy gradient method to solve OPE/L by leveraging both target and source datasets, resulting in substantially enhanced OPE/L in the previously unsolved situations in our empirical evaluations.
Off-policy evaluation (OPE) for contextual bandit policies becomes challenging when action-level importance weighting incurs excessive variance. Doubly robust (DR) estimation remains unbiased under common support but retains these high-variance action-level weights. A prior estimator, Off-policy evaluation with Conjunct Effect Model (OffCEM), replaces them with more stable cluster-level weights, at the cost of relying on local correctness of the reward model. In this paper, we show that, under the assumptions required by DR and OffCEM, there exists an unbiased family of estimators that interpolates between OffCEM and DR. Building on this result, we propose the Variance Optimal-CEM (VOCEM) estimator, which selects the interpolation coefficient to minimize variance. We derive the population-optimal coefficient in closed form and show that the resulting estimator has variance no larger than either endpoint, OffCEM or DR. Experiments in controlled synthetic settings and on two large-action benchmarks show that VOCEM improves upon both endpoints in all 23 evaluated conditions, exhibiting greater stability and empirical robustness.
Nicolò Felicioni, Michael Benigni, Maurizio Ferrari Dacrema +1