Behavioral Aspects of Investment Decisions on Farms

Magdalena Smiglak-Krajewska

Roczniki (Annals), 2023, vol. 2023, issue 3

Abstract: The main purpose of this paper is to identify the behavioral factors that impact the investment decisions made by farm managers. A survey carried out in 2023 with 152 farms located in Greater Poland was the source of empirical materials. The study suggests that overconfidence and over-optimism are not widespread in the group surveyed. In assessing their own knowledge of investment topics, 74% of farmers claimed to be equally competent as other agricultural producers. When preparing the implementation of an investment, most respondents (47%) foresee a neutral scenario of how the situation could development, 20% for an optimistic scenario and only 13% pick a pessimistic one. Nearly 25% of interviewees admitted to rely on the brand’s reputation when choosing a fixed asset (the availability heuristic). The vast majority of farmers surveyed (65%) replied that investing their own funds requires a more in-depth analysis. This corroborates the conclusions made by Richard Thaler and Eric Johnson who discovered that people are less willing to risk their own hardearned money.

Keywords: Financial Economics; Institutional and Behavioral Economics (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:paaero:340045

DOI: 10.22004/ag.econ.340045

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