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Permanent and Transitory Substitution Effects in Health Insurance Experiments

Journal of Labor Economics 1984 2(2), 259-267
Participants in labor market experiments are aware that the experiments run for a limited amount of time. Thus behavior during a temporary experiment will be different than if the experimental change in constraints confronting participants were permanent. In evaluating changes in policy, however, the response to permanent changes is of primary interest. The paper analyzes conditions under which permanent responses can be inferred from data on temporary experiments.