A Theory of Experimenters
CESifo, Munich, 2017
CESifo Working Paper No. 6678
This paper proposes a decision-theoretic framework for experiment design. We model experimenters as ambiguity-averse decision-makers, who make trade-offs between subjective expected performance and robustness. This framework accounts for experimenters’ preference for randomization, and clarifies the circumstances in which randomization is optimal: when the available sample size is large enough or robustness is an important concern. We illustrate the practical value of such a framework by studying the issue of rerandomization. Rerandomization creates a trade-off between subjective performance and robustness. However, robustness loss grows very slowly with the number of times one randomizes. This argues for rerandomizing in most environments.
Empirical and Theoretical Methods
Public Finance
Labour Markets