Efficient targeting of public programs is difficult when the cost or bene!t 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.

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Publication type: 
Working Paper
Date: 
May 03, 2013
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