Test Design under Falsification

Vasiliki Skreta and Eduardo Perez

No 15627, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the optimal design of tests with manipulable inputs: data, actions, reports. An agent can, at a cost, falsify the input into the test, or state of the world, so as to influence the downstream binary decision of a receiver informed by the test. We characterize receiver-optimal tests under different constraints. Under covert falsification, the receiver-optimal test is inefficient. With a rich state space, it involves equilibrium falsification at a possibly large cost to the agent, and may therefore exert a negative social externality. The receiver-optimal test that is immune to falsification, while also inefficient, strictly improves the payoff of the agent. When the falsification strategy of the agent is observable, or can be committed to, the receiver-optimal test is efficient, uses a rich signal space, and gives the receiver at least half of his full information payoff.

Keywords: Information design; Falsification; Tests; Manipulation; Cheating; Bayesian persuasion (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Test Design Under Falsification (2022)
Working Paper: Test Design Under Falsification (2022)
Working Paper: Test Design Under Falsification (2022)
Working Paper: Test Design Under Falsification (2018)
Working Paper: Test Design Under Falsification (2018)
Working Paper: Test Design Under Falsification (2018)
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