We offer a case-study in irrationality, showing that even in a high stakes, deliberate context, highly intelligent professionals may adopt dominated practices. Multiple-choice tests (MCTs) enjoy many advantages that made them popular tools in educational and psychological measurement. But they...

Building on Item Response Theory we introduce students٠optimal behavior in multiple-choice tests. Our simulations indicate that the optimal penalty is relatively high, because although correction for guessing discriminates against risk-averse subjects, this effect is small compared with the...