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Signaling, Random Assignment, and Causal Effect Estimation

hal.structure.identifierDauphine Recherches en Management [DRM]
dc.contributor.authorChemla, Gilles
hal.structure.identifierLondon Business School
dc.contributor.authorHennessy, Christopher A.
dc.date.accessioned2021-10-02T09:01:17Z
dc.date.available2021-10-02T09:01:17Z
dc.date.issued2021
dc.identifier.urihttps://basepub.dauphine.psl.eu/handle/123456789/21907
dc.language.isoenen
dc.subjectCorporate Financeen
dc.subjectGovernment Policyen
dc.subjecthousehold financeen
dc.subjectinvestmenten
dc.subjectselectionen
dc.subject.ddc658.4en
dc.subject.classificationjelD.D8.D82en
dc.subject.classificationjelG.G1.G14en
dc.subject.classificationjelG.G1.G18en
dc.subject.classificationjelJ.J2.J24en
dc.titleSignaling, Random Assignment, and Causal Effect Estimationen
dc.typeCommunication / Conférence
dc.description.abstractenEvidence from quasi-random assignment (e.g. natural experiments, IV, and RDD) has been labeled ìthe most credible. We argue such causal evidence is often misleading in finance/economics,omitting a key component of the true empirical causal effect. Random assignment, in eliminating self-selection, simultaneously precludes signaling via treatment choice. However, outside experiments, agents enjoy discretion to signal, thereby causing changes in beliefs and outcomes.Therefore, if the goal is informing discretionary decisions, rather than predicting outcomes afterforced/mistaken actions, randomization is problematic. As shown, signaling amplifies, attenuates, or reverses signs of causal effects. Thus, traditional empirical finance methods, e.g. event studies, are often more credible/useful.en
dc.subject.ddclabelPrise de décisionen
dc.relation.conftitlePHDBA 239S Finance Seminars 2021en
dc.relation.confdate2021-03
dc.relation.confcityBerkeley / Onlineen
dc.relation.confcountryUnited Statesen
dc.relation.forthcomingnonen
dc.description.ssrncandidatenon
dc.description.halcandidateouien
dc.description.readershiprechercheen
dc.description.audienceInternationalen
dc.relation.Isversionofjnlpeerreviewednonen
dc.date.updated2021-09-28T09:36:45Z
dc.subject.classificationjelHALD - Microeconomics::D8 - Information, Knowledge, and Uncertainty::D82 - Asymmetric and Private Information; Mechanism Designen
dc.subject.classificationjelHALG - Financial Economics::G1 - General Financial Markets::G14 - Information and Market Efficiency; Event Studies; Insider Tradingen
dc.subject.classificationjelHALG - Financial Economics::G1 - General Financial Markets::G18 - Government Policy and Regulationen
dc.subject.classificationjelHALJ - Labor and Demographic Economics::J2 - Demand and Supply of Labor::J24 - Human Capital; Skills; Occupational Choice; Labor Productivityen
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