NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Factorial Designs, Model Selection, and (Incorrect) Inference in Randomized Experiments

Karthik Muralidharan, Mauricio Romero, Kaspar Wüthrich

NBER Working Paper No. 26562
Issued in December 2019
NBER Program(s):Development Economics Program, Economics of Education Program, Health Economics Program, Labor Studies Program, Technical Working Papers

Factorial designs are widely used for studying multiple treatments in one experiment. While “long” model t-tests provide valid inferences, t-tests using the “short” model (ignoring interactions) yield higher power if interactions are zero, but incorrect inferences otherwise. Of 27 factorial experiments published in top-5 journals (2007--2017), 19 use the short model. After including all interactions, over half their results lose significance. Modest local power improvements over the long model are possible, but with lower power for most values of the interaction. If interactions are not of interest, leaving the interaction cells empty yields valid inferences and global power improvements.

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Document Object Identifier (DOI): 10.3386/w26562

 
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