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American Economic Review: Vol. 102 No. 4 (June 2012)

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Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments

Article Citation

Chassang, Sylvain, Gerard Padró I Miquel, and Erik Snowberg. 2012. "Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments." American Economic Review, 102(4): 1279-1309.

DOI: 10.1257/aer.102.4.1279

Abstract

We study the design of randomized controlled experiments when outcomes are significantly affected by experimental subjects' unobserved effort expenditure. While standard randomized controlled trials (RCTs) are internally consistent, the unobservability of effort compromises external validity. We approach trial design as a principal-agent problem and show that natural extensions of RCTs—which we call selective trials—can help improve external validity. In particular, selective trials can disentangle the effects of treatment, effort, and the interaction of treatment and effort. Moreover, they can help identify when treatment effects are affected by erroneous beliefs and inappropriate effort expenditure. (JEL C90, D82)

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Authors

Chassang, Sylvain (Princeton U)
Padró I Miquel, Gerard (London School of Economics)
Snowberg, Erik (CA Institute of Technology)

JEL Classifications

C90: Design of Experiments: General
D82: Asymmetric and Private Information


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