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