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Bias and Bias Correction in Multisite Instrumental Variables Analysis of Heterogeneous Mediator Effects

Sean F. Reardon, Fatih Unlu, Pei Zhu, Howard Bloom


September 3, 2014
The authors explore the use of instrumental variables (IV) analysis with a multisite randomized trial to estimate the effect of a mediating variable on an outcome in cases where it can be assumed that the observed mediator is the only mechanism linking treatment assignment to outcomes, an assumption known in the IV literature as the exclusion restriction. The authors use a random-coefficient IV model that allows both the impact of program assignment on the mediator (compliance with assignment) and the impact of the mediator on the outcome (the mediator effect) to vary across sites and to covary with one another. This extension of conventional fixed-coefficient IV analysis illuminates a potential bias in IV analysis which Reardon and Raudenbush refer to as “compliance-effect covariance bias.”