Fit-risk in Development Projects: Role of Demonstration in Technology Adoption

Moon Parks, Sangeeta Bansal and David Zilberman

No 236321, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: Introduction and adoption of new technologies are an important component of development projects. Many technologies that could spur considerable increase in welfare, however, are often adopted at low rates even when donors and NGOs have invested heavily their effort in them. This paper develops a framework to analyze inefficiencies caused by fit-risk (potential users are not certain whether the technology will fit their needs, lifestyles, social feedback, or capabilities), and the role of marketing tools like demonstration in reducing fit-risk and enhancing efficiency of development projects. We find that, in the presence of fit-risk, there is always unrealized demand and resource waste. Donors who ignore fit-risk always overestimate the project value and over-subsidize the products they are promoting. We identify conditions under which introducing demonstration may help alleviating fit-risk and improve overall project values. The impact of eliminating fit-risk on the project uptake depends on the probability of fit.

Keywords: Institutional and Behavioral Economics; International Development; Research and Development/Tech Change/Emerging Technologies; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 35
Date: 2016
New Economics Papers: this item is included in nep-env and nep-ppm
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/236321/files/Fit_riskBansal%20AAEA2016.pdf (application/pdf)

Related works:
Journal Article: Fit-risk in development projects: role of demonstration in technology adoption (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:236321

DOI: 10.22004/ag.econ.236321

Access Statistics for this paper

More papers in 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().