Bounds for within-household encouragement designs with interference

Abstract

We obtain partial identification of direct and spillover effects in settings with strategic interaction and discrete treatments, outcome and independent instruments. We consider a framework with two decision-makers who play pure-strategy Nash equilibria in treatment takeup, whose outcomes are determined by their joint take-up decisions. We obtain a latent-type representation at the pair level. We enumerate all types that are consistent with pure-strategy Nash equilibria and exclusion restrictions, and then impose conditions such as symmetry, strategic complementarity/substitution, several notions of monotonicity, and homogeneity. Under any combination of the above restrictions, we provide sharp bounds for our parameters of interest via a simple Python optimization routine. Our framework allows the empirical researcher to tailor the above menu of assumptions to their empirical application and to assess their individual and joint identifying power.