How Simulated Randomized Control Trials Work and How to Leverage Them
The Nobel Prize in Economics was awarded recently to three dynamic and impressive economists – Esther Duflo, Abhijit Banerjee, and Kremer – working on one of the world's most important problems: relieving global poverty. Duflo is only the second woman to receive the award as well as the youngest-ever winner. All three awardees are notable for going out into the field and spending their whole careers on an issue that is much harder than what many economists do: staying in their office and working out theoretical insights on a blackboard.
Behavioral Economics and RCTs
How a Simulated RCT Works
In a simulated RCT, we recruit a sample of consumers and apply the same randomization principle as a real RCT: divide them into different groups and give a different marketing message to each one.
Then we test the behavior of each group in a simulated shopping test (or in this case, a simulated doctor-patient consultation). The group who most increases purchasing of the test product, or changes their behavior in the desired way (such as prescribing a particular medicine) is deemed the successful group. The communications message seen by that group is the winner of the test.
Not only can we identify the most effective communications message, but we can determine how much it outperforms the other test messages and the control group. Other clients who have used this approach include an energy drinks company testing key drivers of consumption, an insurance company measuring the effectiveness of different marketing touchpoints, and a whisky company exploring how to maximize their returns from e-commerce.
Simulated RCTs are not suitable for every type of research, of course. And there are lots to discuss both RCTs and Simulated RCTs, such as how best to generalize the results to other situations. We designed the Simulated RCT to address these questions as well as possible, for example by measuring not just which stimulus works best, but why it works (using our System 3 analysis method).
How to Leverage Simulated RCT?
If you'd like to take some inspiration from the Nobel Prize winners making an impact against global poverty and hunger, why not try a cost-effective and accurate Simulated RCT on your next research question? We're donating 10% of all our profits from Simulated RCTs to Evidence Action, a charity that uses RCTs to work out the most effective ways to spend its donors' money around the world to save the most lives.
Simulated RCTs accurately predict the future behavior of your consumers in response to the marketing strategies you will introduce. Helping your stakeholders make reliable, informed decisions based on actual evidence.