American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
A Theory of Experimenters: Robustness, Randomization, and Balance
American Economic Review
vol. 110,
no. 4, April 2020
(pp. 1206–30)
Abstract
This paper studies the problem of experiment design by an ambiguity-averse decision-maker who trades off subjective expected performance against robust performance guarantees. This framework accounts for real-world experimenters' preference for randomization. It also clarifies the circumstances in which randomization is optimal: when the available sample size is large and robustness is an important concern. We apply our model to shed light on the practice of rerandomization, used to improve balance across treatment and control groups. We show that rerandomization creates a trade-off between subjective performance and robust performance guarantees. However, robust performance guarantees diminish very slowly with the number of rerandomizations. This suggests that moderate levels of rerandomization usefully expand the set of acceptable compromises between subjective performance and robustness. Targeting a fixed quantile of balance is safer than targeting an absolute balance objective.Citation
Banerjee, Abhijit V., Sylvain Chassang, Sergio Montero, and Erik Snowberg. 2020. "A Theory of Experimenters: Robustness, Randomization, and Balance." American Economic Review 110 (4): 1206–30. DOI: 10.1257/aer.20171634Additional Materials
JEL Classification
- C90 Design of Experiments: General
- D81 Criteria for Decision-Making under Risk and Uncertainty