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AMBIGUITY AVERSION AS A PREDICTOR OF TECHNOLOGY CHOICE: EXPERIMENTAL EVIDENCE FROM PERU

Jim Engle-Warnick (), Javier Escobal and Sonia Laszlo ()

Departmental Working Papers from McGill University, Department of Economics

Abstract: The lack of adoption of new farming technologies despite known benefits is a well-documented phenomenon in development economics. In addition to a number of market constraints, risk aversion predominates the discussion of behavioral determinants of technology adoption. We hypothesize that ambiguity aversion may also be a determinant, since farmers may have less information about the distribution of yield outcomes from new technologies compared with traditional technologies. We test this hypothesis with a laboratory experiment in the field in which we measure risk and ambiguity preferences. We combine our experiment with a survey in which we collect information on farm decisions and identify market constraints. We find that ambiguity aversion does indeed predict actual technology choices on the farm.

JEL-codes: O33 O18 C91 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2007-05
New Economics Papers: this item is included in nep-agr, nep-exp, nep-ino, nep-lam and nep-upt
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Working Paper: Ambiguity Aversion as a Predictor of Technology Choice: Experimental Evidence from Peru (2007) Downloads
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