@article{162,
  author = {Philipe Bond and Rohini Pande},
  title = {Coordinating Development: Can Income-based Incentive Schemes Eliminate Pareto Inferior Equilibria?},
  abstract = {Individuals' inability to coordinate investment may significantly constrain economic development. In this paper we study a simple investment game characterized by multiple equilibria and ask whether an income-based incentive scheme can uniquely implement the high-investment outcome. A general property of this game is the presence of a crossover-investment point at which an individual's incomes from investment and non-investment are equal. We show that arbitrarily small errors in the government's knowledge of this crossover point can prevent unique implementation of the high-investment outcome. We conclude that informational requirements are likely to severely limit a government's ability to use income-based incentive schemes as a coordination device.},
  year = {2007},
  journal = {Journal of Development Economics},
  volume = {83},
  pages = {368-391},
}