Tuesday 3 May 2016

Once we receive false data

Sometimes when doing some research, we receive some unreliable data as the data providers may have some personal interests to deviate data from true values. However, if we understand the providers' utility function, it is possible to mitigate the bias of the data that we receive. The data provider wants to maximise the utility gained from deviating the data from true values, however the marginal utility is diminishing. Moreover, the provider wants to minimise the damage caused by deviating the data, and the marginal loss of deviating data is strictly increasing. Therefore, if we are able to model the gain and loss of the data provider from deviating the data from true values, it is possible to correct the data to true values.

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