Experiment-as-Market: Incorporating Welfare into Randomized Controlled Trials

98 Pages Posted: 5 Jan 2018 Last revised: 12 May 2019

See all articles by Yusuke Narita

Yusuke Narita

Yale University - Department of Economics; Yale University - Cowles Foundation

Date Written: January 10, 2019


Randomized Controlled Trials (RCTs) enroll hundreds of millions of subjects and involve many human lives. To improve subjects’ welfare, I propose a design of RCTs that I call Experiment-as-Market (EXAM). EXAM produces a Pareto efficient allocation of treatment assignment probabilities, is asymptotically incentive compatible for preference elicitation, and unbiasedly estimates any causal effect estimable with standard RCTs. I quantify these properties by applying EXAM to a water cleaning experiment in Kenya (Kremer et al., 2011). In this empirical setting, compared to standard RCTs, EXAM substantially improves subjects’ predicted well-being while reaching similar treatment effect estimates with similar precision.

Keywords: Clinical Trial, Social Experiment, A/B Test, Market Design, Competitive Equilibrium from Equal Income, Pareto Efficiency, Causal Inference, Development Economics

Suggested Citation

Narita, Yusuke, Experiment-as-Market: Incorporating Welfare into Randomized Controlled Trials (January 10, 2019). Available at SSRN: https://ssrn.com/abstract=3094905 or http://dx.doi.org/10.2139/ssrn.3094905

Yusuke Narita (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

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