Do farmers act like perfectly rational profit maximisers? Results of an extra-laboratory experiment

Jan Schwarze, Gesa Sophie Holst and Oliver Musshoff

International Journal of Agricultural Management, 2014, vol. 04, issue 01

Abstract: Many economic studies are based on the theory of the homo oeconomicus, frequently put simply and described as a perfectly rational, profit-maximising decision-maker. However, there are often considerable differences between the theoretical decisions based on this theory and the behaviour of farmers observed in reality. The specific magnitude and the influencing factors of this discrepancy are hardly analysed due to the lack of a benchmark in reality. Therefore, on the basis of realistic decisions made by farmers in an extra laboratory experiment, the present study investigates if farmers act as perfectly rational profit maximisers. Furthermore, factors shall be identified that influence deviations from relative economic performance. The results show that farmers are not perfectly rational profit-maximising decision-makers. The decision-making behaviour is rather influenced by the farmers' socio-demographic and socio-economic characteristics, such as the gender or the leading position of the farmer.

Keywords: Farm Management; Institutional and Behavioral Economics (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijameu:262336

DOI: 10.22004/ag.econ.262336

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