Interpreting TSLS Estimators in Information Provision Experiments

Vilfort, Vod; Zhang, Whitney

doi:10.1257/aeri.20240353

Abstract

In information provision experiments, researchers often estimate the causal effects of beliefs on actions using two-stage least squares (TSLS). This paper formalizes exclusion and monotonicity conditions that ensure TSLS recovers a positive-weighted average of causal effects. We assess common TSLS estimators for both passive and active control designs from the literature; we find that two commonly-used passive control estimators generally allow for negative weights. The choice of passive control estimator affects the magnitude and significance of estimates in simulations and in an empirical application. We give practical recommendations for addressing these issues.

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