A Random Shock Is Not Random Assignment

Christoph Engel ()

No 2016_09, Working Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: A random shock excludes reverse causality and reduces omitted variable bias. Yet a natural experiment does not identify random exposure to treatment, but the reaction to a random change from baseline to treatment. A lab experiment comparing higher certainty with higher severity of punishment for stealing (holding the expected value of the intervention constant) shows that the difference between the effects of a random shock and random assignment can be pronounced.

Keywords: identification; random exposure; random shock; natural experiment; certainty and severity of punishment (search for similar items in EconPapers)
JEL-codes: C01 C12 C90 K14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
Date: 2016-05
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Journal Article: A random shock is not random assignment (2016)
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