  Difference-in-differences is a common method for estimating treatment
effects, and the parallel trends condition is its main identifying assumption:
the trend in mean untreated outcomes is independent of the observed treatment
status. In observational settings, treatment is often a dynamic choice made or
influenced by rational actors, such as policy-makers, firms, or individual
agents. This paper relates parallel trends to economic models of dynamic
choice. We clarify the implications of parallel trends on agent behavior and
study when dynamic selection motives lead to violations of parallel trends.
Finally, we consider identification under alternative assumptions that
accommodate features of dynamic choice.
