Controls, belief updating, and bias in medical RCTs

Chemla, G and Hennessy, C (2019) Controls, belief updating, and bias in medical RCTs. Journal of Economic Theory, 184. ISSN 0022-0531 OPEN ACCESS


We develop a formal model of placebo effects. If subjects in seemingly-ideal single-stage RCTs [Randomized Control Trials] 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.

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Item Type: Article
Subject Areas: Finance
Funder Name: European Research Council
Date Deposited: 20 Sep 2019 16:23
Date of first compliant deposit: 07 Jan 2020
Last Modified: 28 Feb 2023 10:46

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