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  5. Manipulation-Robust Prediction

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Manipulation-Robust Prediction

  • Daniel Björkegren
  • Joshua E. Blumenstock
  • Samsun Knight
American Economic Review (Forthcoming)

Abstract

An increasing number of decisions are guided by machine learning algorithms. But when consequential decisions are encoded in algorithms, individuals may strategically alter their behavior to achieve desired outcomes. This paper develops an empirical approach that adjusts decision algorithms to anticipate manipulation. By explicitly modeling incentives to manipulate, our approach produces decision rules that are stable under manipulation, even when the rules are fully transparent. We stress test this approach through a large field experiment in Kenya. When implemented, linear strategy-robust decision rules outperform standard linear models such as LASSO.

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