Efficient targeting of public programs is difficult when the cost or
benefit to potential recipients is private information. This study
illustrates the potential of self-selection to improve allocational
outcomes in the context of a program that subsidizes tree planting
in Malawi. Landholders who received a tree planting contract as a
result of bidding in an auction kept significantly more trees alive over
a three year period than did landholders who received the contract
through a lottery. The gains from targeting on private information
through the auction represent a 30 percent cost savings per surviving
tree for the implementing organization.
Jack, B Kelsey.
"Private Information and the Allocation of Land Use Subsidies in Malawi."
American Economic Journal: Applied Economics,
Microeconomic Policy: Formulation; Implementation; Evaluation
Asymmetric and Private Information; Mechanism Design
Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Renewable Resources and Conservation: Land
Renewable Resources and Conservation: Government Policy