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

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Abstract

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.

Suggested Citation

  • Yusuke Narita, 2018. "Experiment-as-Market: Incorporating Welfare into Randomized Controlled Trials," Cowles Foundation Discussion Papers 2127r, Cowles Foundation for Research in Economics, Yale University, revised May 2019.
  • Handle: RePEc:cwl:cwldpp:2127r
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    Cited by:

    1. Patrick Kline & Christopher Walters, 2019. "Audits as Evidence: Experiments, Ensembles, and Enforcement," Papers 1907.06622, arXiv.org, revised Jul 2019.
    2. Yusuke Narita, 2020. "A Theory of Quasi-Experimental Evaluation of School Quality," Working Papers 2020-085, Human Capital and Economic Opportunity Working Group.

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    More about this item

    Keywords

    Research Ethics; Clinical Trial; Social Experiment; A/B Test; Market Design; Causal Inference; Development Economics; Spring Protection; Discrete Choice;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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