Disincentive Effects of Evaluation

In a model of project design, evaluation, and selection, we explore how the incentives to improve the design of projects depend on the availability of funding and the process of evaluation. We show that project designers (researchers or NGOs) prefer to subject their projects to less-rigorous evaluations than donors or funding agencies would prefer, ex-post. We also show how an increase in either funding availability or the informativeness of evaluations tends to decrease investments in project quality. By implication, increased availability of funding or more-informative evaluations can lead to the implementation of fewer high-value projects.