Comparison of the investment behavior of Kazakhstani and German farmers: An experimental approach

Dulat Tubetov, Syster Christin Maart and Oliver Musshoff

No 125218, 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil from International Association of Agricultural Economists

Abstract: The agricultural sectors of Kazakhstan and Germany are at different development levels. One possible explanation for this might be the different investment behavior of farmers. We experimentally analyze whether the investment behavior of farmers is consistent with the normative benchmarks of the net present value criterion or the real options approach. Furthermore, we experimentally compare the investment behavior of farmers in the two countries in an agricultural and a non-agricultural treatment. In addition, farmers were confronted with the two treatments in a different order. Our results show that both theories cannot exactly predict the investment behavior of farmers. Farmers invest later than the net present value criterion suggests and earlier than the real options approach suggests. However, German farmers invest later than Kazakhstani farmers, which mean that the investment behavior of German farmers is closer to the superior real options approach. Therefore, the different investment behavior might partly be an explanation for different development levels of the agricultural sectors of the two countries. Moreover, results are independent from the framing of an agricultural and a non-agricultural treatment. However, farmers learn from their former investment decisions and consider the value of waiting over time.

Keywords: Agricultural Finance; Institutional and Behavioral Economics; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 33
Date: 2012
New Economics Papers: this item is included in nep-agr and nep-exp
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Working Paper: Comparison of the investment behavior of Kazakhstani and German farmers: An experimental approach (2012)
Working Paper: The comparison of investment behaviors of Kazakhstani and German farmers: An experimental approach (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae12:125218

DOI: 10.22004/ag.econ.125218

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