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Controls, belief updating, and bias in medical RCTs

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  • Chemla, Gilles
  • Hennessy, Christopher A.

Abstract

We develop a formal model of placebo effects. If subjects in seemingly-ideal single-stage RCTs update beliefs about breakthroughs based upon personal physiological responses, mental effects differ across medications received, treatment versus control. Consequently, the average cross-arm health difference becomes a biased estimator. Constructively, we show: bias can be altered through choice of control; higher-efficacy controls mitigate upward bias; and efficacy states can be revealed through controls of intermediate efficacy or controls that mimic a subset of efficacy states. Consistent with experimental evidence, our theory implies outcomes within-arm and cross-arm differences can be non-monotone in treatment probability. Finally, we develop novel differences-in-differences and triangle equality tests to detect RCT bias.

Suggested Citation

  • Chemla, Gilles & Hennessy, Christopher A., 2019. "Controls, belief updating, and bias in medical RCTs," Journal of Economic Theory, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:jetheo:v:184:y:2019:i:c:s0022053119300808
    DOI: 10.1016/j.jet.2019.07.016
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hennessy, Christopher A. & Chemla, Gilles, 2022. "Signaling, instrumentation, and CFO decision-making," Journal of Financial Economics, Elsevier, vol. 144(3), pages 849-863.
    2. Chemla, Gilles & Hennessy, Christopher, 2020. "Signaling, Random Assignment, and Causal Effect Estimation," CEPR Discussion Papers 15175, C.E.P.R. Discussion Papers.
    3. Custódio, Cláudia & Mendes, Diogo & Metzger, Daniel, 2020. "The Impact of Financial Education of Managers on Medium and Large Enterprises - A Randomized Controlled Trial in Mozambique," CEPR Discussion Papers 15294, C.E.P.R. Discussion Papers.
    4. Claudia Custodio & Diogo Mendes & Daniel Metzger, 2021. "The impact of financial education of executives on financial practices of medium and large enterprises," NOVAFRICA Working Paper Series wp2105, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.

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    More about this item

    Keywords

    Belief updating; Medical RCTs; Bias; Control; Treatment;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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