I honestly think it is a judgement call. If they ride up on a bike, and look like they know what they're doing, and have cash in hand, I would consider it. Tell them to bring a photocopy of their driver's license WITH MOTORCYCLE ENDORSEMENT, and leave a deposit with you. They shouldn't need more than 15 minutes so they can ride a bit and get up to speed on a local stretch of highway. Every bike we've bought (4, not counting my project bike), I have test ridden first. For my wife's bike, we both test rode.
If you have another bike, go with him and lead him around some good stretch of road. That's how the PO sold me my Sprint. After following him on his Wes Cooley replica for about 20 miles, I was sold!
If it is a kid getting his first bike, or they just look creepy, then decline.
No joy rides. Serious buyers only!
BTW, check that your insurance covers other riders. It probably should, just like your car.
One of the Honda dealers I go to here does not allow test rides for liability reasons. I don't know how you sell new bikes that way; but they do a good business. Our local Triumph dealer allows test rides, and it has been scary sometimes watching as they leave the parking lot.