Ambiguity Aversion as a Predictor of Technology Choice: Experimental Evidence from Peru
41 Pages Posted: 10 Jan 2008 Last revised: 13 Jun 2014
Date Written: January 1, 2007
Abstract
The lack of adoption of new farming technologies despite known benefits is a well-documented phenomenon in development economics. In addition to a number of market constraints, risk aversion predominates the discussion of behavioral determinants of technology adoption. We hypothesize that ambiguity aversion may also be a determinant, since farmers may have less information about the distribution of yield outcomes from new technologies compared with traditional technologies. We test this hypothesis with a laboratory experiment in the field in which we measure risk and ambiguity preferences. We combine our experiment with a survey in which we collect information on farm decisions and identify market constraints. We find that ambiguity aversion does indeed predict actual technology choices on the farm.
Keywords: experimental economics, risk measurement instruments, risk preferences, rural development, technology choice
JEL Classification: O33, O18, C91
Suggested Citation: Suggested Citation