DP8003 Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments

Author(s): Sylvain Chassang, Gerard Padró i Miquel, Erik Snowberg
Publication Date: September 2010
Keyword(s): blind trials, compliance, heterogeneous beliefs, incentivized trials, marginal treatment e ects, mechanism design, randomized controlled trials, selection, selective trials
JEL(s): c81, c93, d82, o12
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8003

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.