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

  • Sylvain Chassang
  • Gerard Padro I Miquel
  • Erik Snowberg

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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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 4 (June)
Pages: 1279-1309

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:4:p:1279-1309
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