PR - Disinvestment Behaviour Of Agricultural Entrepreneurs: Experimental Results (p380-387)

Syster Christin Maart, Oliver Mußhoff, Martin Odening, Serena Sandri and Christian Schade
Authors registered in the RePEc Author Service: Oliver Musshoff

No 345580, 18th Congress, Methven, New Zealand, 2011 from International Farm Management Association

Abstract: Agrarian structures are often characterized by some kind of economic inertia. It is particularly puzzling why unprofitable farms persist over time instead of being sold. In this paper we analyze the exit decision of farmers using the real options approach. The validity of the real options theory is assessed by means of laboratory experiments. Our results show that real options models are able to predict actual disinvestment decisions better than traditional investment theory. Nevertheless, the observed disinvestment reluctance was even more pronounced as predicted by real options theory.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 8
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma11:345580

DOI: 10.22004/ag.econ.345580

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