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Test Design Under Falsification

Eduardo Perez () and Vasiliki Skreta
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Vasiliki Skreta: University of Texas at Austin

No 2018-13, Sciences Po publications from Sciences Po

Abstract: We characterize a receiver-optimal test when manipulations are possible in the form of type falsification. Optimal design exploits the following manipulator trade-off: while falsification may lead to better grades, it devalues their meaning. We show that optimal tests can be derived among falsification-proof ones. Our optimal test has a single ‘failing’ grade, and a continuum of ‘passing’ grades. It makes the manipulator indifferent across all moderate levels of falsification. Good types never fail, but bad types may pass. An optimal test delivers at least half of the full-information value to the receiver. A three-grade optimal test also performs well.

Keywords: Information Design; Falsification; Tests; Manipulation; Cheating; Persuasion (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-des
Date: 2018-05
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