Comparing two treatments by decision theory

Decision theory is applied to the general problem of comparing two treatments in an experiment with subjects assigned to the treatments at random. The inferential agenda covers collection of evidence about superiority, non-inferiority and average bioequivalence of the treatments. The proposed approach requires defining the terms small' and large' to qualify the magnitude of the treatment effect and specifying the losses (or loss functions) that quantify the consequences of the incorrect conclusions. We argue that any analysis that ignores these two inputs is deficient, and so is any ad hoc way of taking them into account. Sample size calculation for studies intended to be analysed by this approach is also discussed. Copyright (c) 2016 John Wiley & Sons, Ltd.