Perez-Richet, Eduardo;
Skreta, Vasiliki;
(2022)
Test Design Under Falsification.
Econometrica
, 90
(3)
pp. 1109-1142.
10.3982/ECTA16346.
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Abstract
We study the optimal design of tests with manipulable inputs. Tests take a unidimensional state of the world as input and output, an informative signal to guide a receiver's approve or reject decision. The receiver wishes to only approve states that comply with her baseline standard. An agent with a preference for approval can covertly falsify the state of the world at a cost. We characterize receiver-optimal tests and show they rely on productive falsification by compliant states. They work by setting a more stringent operational standard, and granting noncompliant states a positive approval probability to deter them from falsifying to the standard. We also study how falsification-detection technologies improve optimal tests. They allow the designer to build an implicit cost of falsification into the test, in the form of signal devaluations. Exploiting this channel requires enriching the signal space.
| Type: | Article |
|---|---|
| Title: | Test Design Under Falsification |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.3982/ECTA16346 |
| Publisher version: | https://doi.org/10.3982/ECTA16346 |
| Language: | English |
| Additional information: | © 2022 The Authors. Econometrica published by John Wiley & Sons Ltd on behalf of The Econometric Society. Vasiliki Skreta is the corresponding author on this paper. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made. |
| Keywords: | Information design, falsification, tests, manipulation, cheating, persuasion |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics UCL > Provost and Vice Provost Offices > UCL SLASH UCL |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10152422 |
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