Causal Inference under Interference through Designed Markets

Abstract: Equilibrium effects make it challenging to evaluate the impact of an individual-level treatment on outcomes in a single market, even with data from a randomized trial. In some markets, however, a centralized mechanism allocates goods and imposes useful structure on spillovers. For a class of strategy-proof "cutoff" mechanisms, we propose an estimator for global treatment effects using individual-level data from one market, where treatment assignment is unconfounded. Algorithmically, we re-run a weighted and perturbed version of the mechanism. Under a continuum market approximation, the estimator is asymptotically normal and semi-parametrically efficient. We extend this approach to learn spillover-aware treatment rules with vanishing asymptotic regret. Empirically, adjusting for equilibrium effects notably diminishes the estimated effect of information on inequality in the Chilean school system.