Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments
Princeton University William S. Dietrich II Economic Theory Center
Gerard Padro I. Miquel
London School of Economics & Political Science (LSE); National Bureau of Economic Research (NBER)
California Institute of Technology - Division of the Humanities and Social Sciences; National Bureau of Economic Research (NBER)
December 21, 2010
Economic Theory Center Working Paper No. 003-2010
We study the design of randomized controlled experiments in environments where outcomes are significantly affected by unobserved effort decisions taken by the subjects (agents). While standard randomized controlled trials (RCTs) are internally consistent, the unobservability of effort provision 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 the external validity of experiments. In particular, selective trials can disentangle the effects of treatment, effort, and the interaction of treatment and effort. Moreover, they can help experimenters identify when measured treatment effects are affected by erroneous beliefs and inappropriate effort provision.
Number of Pages in PDF File: 51
Keywords: Randomized Controlled Trials, Selective Trials, Blind Trials, Incentivized Trials, Marginal Treatment Effects, Mechanism Design, Selection, Heterogeneous Beliefs, Compliance
JEL Classification: C81, C93, D82, O12
Date posted: December 22, 2010
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