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

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.

Authors: 
Yusuke Narita, Massachusetts Institute of Technology
Publication Date: 
April, 2019
Publication Status: 
Document Number: 
2019-025
File Description: 
First version, January 10, 2019