Moral Hazard: Experimental Evidence from Tenancy Contracts
Konrad B. Burchardi,
Benedetta Lerva and
No 12232, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We report results from a field experiment designed to estimate the effects of tenancy contracts on agricultural input choices, risk-taking, and output. The experiment induced variation in the terms of sharecropping contracts: some tenants paid 50% of output in compensation for land usage; others paid 25%; again others paid 50% of output and received cash, either fixed or stochastic. We find that tenants with higher output share utilized more inputs, cultivated riskier crops, and generated 60% more output relative to control. Cash transfers did not effect farm output. We interpret the increase in output as the incentive effect of sharecropping.
Keywords: Agricultural Productivity; Contracts; Incentive Effects; Sharecropping (search for similar items in EconPapers)
JEL-codes: C93 D22 O13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cta, nep-exp and nep-hrm
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