Publications
Publications
- March 2022
- American Economic Review
Targeting High Ability Entrepreneurs Using Community Information: Mechanism Design in the Field
Abstract
Identifying high-growth microentrepreneurs in low-income countries remains a challenge due to a scarcity of verifiable information. With a cash grant experiment in India we demonstrate that community knowledge can help target high-growth microentrepreneurs; while the average marginal return to capital in our sample is 9.5% per month, microentrepreneurs reported in the top third of the community are estimated to have marginal return to capital between 24% and 30% per month. Further we find evidence that community members distort their predictions when they can influence the distribution of resources. Finally, we demonstrate that simple mechanisms can realign incentives for truthful reporting.
Keywords
Microentrepreneurs; Community Information; Field Experiment; Loans; Entrepreneurship; Developing Countries and Economies; Financing and Loans; Information; Mathematical Methods; India
Citation
Hussam, Reshmaan, Natalia Rigol, and Benjamin N. Roth. "Targeting High Ability Entrepreneurs Using Community Information: Mechanism Design in the Field." American Economic Review 112, no. 3 (March 2022): 861–898.