Risk and ambiguity preferences and the adoption of new agricultural technologies

Advances in agricultural development have largely been a direct result of increased usage of new technologies. Among other important factors, farmers’ perceptions of risks associated with the new technology as well as their ability or willingness to take risks greatly influences their adoption decisions. In this paper we conduct a series of field experiments in rural India in order to measure preferences related to risk, potential loss, and ambiguity. Disaggregating by gender, we find that on average women are significantly more risk averse and loss averse than men, though the higher average risk aversion arises due to a greater share of women who are extremely risk averse. Through an empirical example, we demonstrate how these parameters affect decisions to adopt new agricultural technologies, specifically drought-tolerant seeds. By combining these results with a discrete choice experiment over new and familiar rice seeds, we find that ambiguity averse individuals are no more likely to remain with the status quo, while a greater degree of risk aversion and loss aversion generally suggests that people are more willing to switch to the new, risk-reducing variety.

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