Instrumental Variables (IV)
Uses an external 'instrument' that affects treatment but not outcome directly to identify causal effects.
Last updated: 2026-05-04
Definition
IV solves the endogeneity problem: when treated and untreated groups self-select (e.g., engaged users see your ad), naive comparison overstates the effect. A valid instrument is correlated with treatment but uncorrelated with the outcome's confounders. Hard to find in marketing — common instruments are weather, exogenous policy shocks, or experimental random rollouts.
How it applies in India
No India-specific behavior.
Related terms
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