Abstract: Guided by the principal-agent theory and mechanism design theory, this paper makes a research into the working mechanism of “overall plan by the central government, responsibility by provincial governments, and implementation by lower-level governments” that underlies the practice of targeted poverty alleviation. By establishing a three-tier principal-agent framework among the central government, local governments, village committee and farmers, this paper sums up the incentive and restraint mechanisms and behavior choices of each participant in the process of targeted poverty alleviation, and analyzes the formation mechanism of moral hazard problems such as elite capture problem, poor people’s welfare dependency, “digital poverty alleviation”. Furthermore, we put forward corresponding countermeasures for consolidating the achievements of poverty alleviation and promoting rural revitalization from the perspective of incentive compatibility.

Key words: targeted poverty alleviation, rural revitalization, moral hazard, multiple principal-agent