Computerized adaptive testing (CAT) is a form of computer-based test that adapts to the examinee's ability level. For this reason, it has also been called tailored testing. In other words, it is a form of computer-administered test in which the next item or set of items selected to be administered depends on the correctness of the test taker's responses to the most recent items administered.
CAT successively selects questions for the purpose of maximizing the precision of the exam based on what is known about the examinee from previous questions. From the examinee's perspective, the difficulty of the exam seems to tailor itself to their level of ability. For example, if an examinee performs well on an item of intermediate difficulty, they will then be presented with a more difficult question. Or, if they performed poorly, they would be presented with a simpler question. Compared to static multiple choice tests that nearly everyone has experienced, with a fixed set of items administered to all examinees, computer-adaptive tests require fewer test items to arrive at equally accurate scores. (Of course, there is nothing about the CAT methodology that requires the items to be multiple-choice; but just as most exams are multiple-choice, most CAT exams also use this format.)
The basic computer-adaptive testing method is an iterative algorithm with the following steps:
Nothing is known about the examinee prior to the administration of the first item, so the algorithm is generally started by selecting an item of medium, or medium-easy, difficulty as the first item.
As a result of adaptive administration, different examinees receive quite different tests. The psychometric technology that allows equitable scores to be computed across different sets of items is item response theory (IRT). IRT is also the preferred methodology for selecting optimal items which are typically selected on the basis of information rather than difficulty, per se.
In the United States, the Graduate Management Admission Test are currently primarily administered as a computer-adaptive test. A list of active CAT programs is found at International Association for Computerized Adaptive Testing, along with a list of current CAT research programs and a near-inclusive bibliography of all published CAT research.