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.
Ambiguity Aversion As A Predictor Of Technology Choice: Experimental Evidence From Peru
Helping farmers overcome ambiguity around outcomes of using innovative techniques can make them more likely to experiment with new methods.
Warnick, J. C. E., Escobal, J., & Laszlo, S. C. (2011). Ambiguity aversion and portfolio choice in small-scale Peruvian farming. The BE Journal of Economic Analysis & Policy, 11(1).