Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/223458 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8386
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
Session-specific features of a laboratory experiment, if those exist, do not disappear by clustering standard errors at the session level. Randomly ordering sessions, which is crucial to deal with sampling issues, cannot justify clustering the standard errors at the session level. The experimental design should primarily determine the clustering level. In a typical controlled laboratory experiment where subjects make choices in the same environment repeatedly, clustering at a participant level is inherited from the experimental design, and standard errors could be larger (that is, statistical inference can be more conservative) when clustered at the individual or decision-group level than the session level. It implies that clustering standard errors at the session level can lead to false-positive treatment effects if it is mistakenly chosen. A rule of thumb using standard deviations is introduced.
Subjects: 
lab experiment
cluster-adjusted standard errors
JEL: 
C18
C90
Document Type: 
Working Paper
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