Author(s)
Yusuke Narita

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.

JEL Codes
C93: Field Experiments
D47: Market Design
O15: Economic Development: Human Resources; Human Development; Income Distribution; Migration
Keywords
clinical trial
social experiments
A/B test
market design
competitive equilibrium from equal income
Pareto efficiency
causal inference
development economics