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Test Design Under Falsification

Eduardo Perez and Vasiliki Skreta

Econometrica, 2022, vol. 90, issue 3, 1109-1142

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.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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https://doi.org/10.3982/ECTA16346

Related works:
Working Paper: Test Design Under Falsification (2022) Downloads
Working Paper: Test Design Under Falsification (2022) Downloads
Working Paper: Test Design under Falsification (2021) Downloads
Working Paper: Test Design Under Falsification (2018) Downloads
Working Paper: Test Design Under Falsification (2018) Downloads
Working Paper: Test Design Under Falsification (2018) Downloads
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