Download This PaperTreatment Effect Models with Strategic Interaction in Treatment Decisions
67 Pages Posted: 12 Nov 2018 Last revised: 22 Feb 2023
Date Written: February 2023
Abstract
This study considers treatment effect models in which others' treatment decisions can affect both one's own treatment and outcome. Focusing on the case of two-player interactions, we formulate treatment decision behavior as a complete information game with multiple equilibria. Using a latent index framework and assuming a stochastic equilibrium selection, we prove that the marginal treatment effect from one's own treatment and that from the partner are identifiable on the conditional supports of certain threshold variables determined through the game model. Based on our constructive identification results, we propose a two-step semiparametric procedure for estimating the marginal treatment effects using series approximation. We show that the proposed estimator is uniformly consistent and asymptotically normally distributed. As an empirical illustration, we investigate the impacts of risky behaviors on adolescents' academic performance.
Keywords: binary games, latent index models, marginal treatment effects, series estimation, strategic interaction
JEL Classification: C14, C31, C57
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