  We introduce a model of probabilistic verification in mechanism design. The
principal elicits a message from the agent and then selects a test to give the
agent. The agent's true type determines the probability with which he can pass
each test. We characterize whether each type has an associated test that best
screens out all other types. If this condition holds, then the testing
technology can be represented in a tractable reduced form. We use this reduced
form to solve for profit-maximizing mechanisms with verification. As the
verification technology varies, the solution continuously interpolates between
the no-verification solution and full surplus extraction.
