I conducted an experiment where subjects made two decisions. the first (Pre) decision was unaffected by any treatment, whereas subjects made their second decision (Post) after being randomly allocated to a treatment condition. I define

D=Post−Pre

I am primarily interested in how Pre predicts D differently based on treatment assignment, i.e. the interaction.

To answer this question I estimate the following regression model

(1) D_i=b0+b1Treat_i+b2Pre_i+b3Treat_i∗Pre_i+e_i

 

Now, the variables Pre and Post are monetary donation amounts. In the experiment, donations had lower and upper limits of 0 and 100, both in the pre- and post-test.

Consequently, the lower and upper limits for the variable D

depend on the Pre donations.

For example, if a subject donated Pre=25, then −25

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