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Do farmers act like perfectly rational profit maximisers? Results of an extra-laboratory experiment

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  • Schwarze, Jan
  • Holst, Gesa Sophie
  • Mußhoff, Oliver

Abstract

Many economic studies are based on the theory of the homo oeconomicus, frequently put simply and described as a perfectly rational, profit-maximising decision-maker. However, there are often considerable differences between the theoretical decisions based on this theory and the behaviour of farmers observed in reality. The specific magnitude and the influencing factors of this discrepancy are hardly analysed due to the lack of a benchmark in reality. Therefore, on the basis of realistic decisions made by farmers in an extra laboratory experiment, the present study investigates if farmers act as perfectly rational profit maximisers. Furthermore, factors shall be identified that influence deviations from relative economic performance. The results show that farmers are not perfectly rational profit-maximising decision-makers. The decision-making behaviour is rather influenced by the farmers' socio-demographic and socio-economic characteristics, such as the gender or the leading position of the farmer.

Suggested Citation

  • Schwarze, Jan & Holst, Gesa Sophie & Mußhoff, Oliver, 2014. "Do farmers act like perfectly rational profit maximisers? Results of an extra-laboratory experiment," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 4(1), October.
    • Handle: RePEc:ags:ijameu:262336
    DOI: 10.22004/ag.econ.262336
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    2. Appel, Franziska & Balmann, Alfons & Dong, Changxing & Rommel, Jens, 2018. "FarmAgriPoliS: An agricultural business management game for behavioral experiments, teaching, and gaming," IAMO Discussion Papers 271455, Institute of Agricultural Development in Transition Economies (IAMO).
    3. Hintz, Kendisha Soekardjo & Pretzsch, Jürgen, 2023. "Smallholder perceptions of and willingness to participate in Forest Farmers' Organizations: Insights from case studies in Ethiopia and Tanzania," Forest Policy and Economics, Elsevier, vol. 149(C).
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