Ambiguity Aversion as a Predictor of Technology Choice: Experimental Evidence from Peru

41 Pages Posted: 10 Jan 2008 Last revised: 13 Jun 2014

See all articles by Jim Engle-Warnick

Jim Engle-Warnick

McGill University - Department of Economics

Javier Escobal

Grupo de Analisis para el Desarrollo (GRADE)

Sonia Laszlo

McGill University - Department of Economics

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

Engle-Warnick, Jim and Escobal, Javier and Laszlo, Sonia, Ambiguity Aversion as a Predictor of Technology Choice: Experimental Evidence from Peru (January 1, 2007). CIRANO - Scientific Publications 2007s-01, Available at SSRN: https://ssrn.com/abstract=1077656 or http://dx.doi.org/10.2139/ssrn.1077656

Jim Engle-Warnick (Contact Author)

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
Canada

Javier Escobal

Grupo de Analisis para el Desarrollo (GRADE) ( email )

Av, Graú 915
Barranco
Lima, Lima
Peru

Sonia Laszlo

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
Canada

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
364
Abstract Views
1,986
Rank
150,248
PlumX Metrics