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The Effects of Risk and Ambiguity Aversion on Technology Adoption: Evidence from Aquaculture in Ghana

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  • Crentsil, Christian
  • Gschwandtner, Adelina
  • Wahhaj, Zaki

Abstract

We study how aversion to risk and ambiguity aects the adoption of new tech- nologies by Ghanaian smallholder aquafarmers. We conduct a set of eld experiments designed to elicit farmers' risk and ambiguity preferences and combine it with survey- based information on their technology adoption decisions. We nd that aquafarmers who are more risk-averse were quicker to adopt the new technologies: a fast-growing breed of tilapia sh, extruded feed and oating cages. By contrast, ambiguity aversion has no eect on the adoption of the new tilapia breed and extruded feed. Furthermore, it slows down the adoption of oating cages - a technology which entails higher xed costs than the others - and the eect is diminishing in the number of other adopters in the village. We argue that these dierential eects are due to the fact that the technolo- gies are risk-reducing, with potential ambiguity about their payo distributions at the early stages of adoption. The ndings highlight the importance of distinguishing be- tween risk and ambiguity in investigating technology adoption decisions of small-holder farmers in developing countries.

Suggested Citation

  • Crentsil, Christian & Gschwandtner, Adelina & Wahhaj, Zaki, "undated". "The Effects of Risk and Ambiguity Aversion on Technology Adoption: Evidence from Aquaculture in Ghana," 93rd Annual Conference, April 15-17, 2019, Warwick University, Coventry, UK 289575, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc19:289575
    DOI: 10.22004/ag.econ.289575
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    2. Freudenreich, Hanna & Musshoff, Oliver, 2022. "Experience of losses and aversion to uncertainty - experimental evidence from farmers in Mexico," Ecological Economics, Elsevier, vol. 195(C).
    3. Wu, Haixia & Ge, Yan & Li, Jianping, 2023. "Uncertainty, time preference and households’ adoption of rooftop photovoltaic technology," Energy, Elsevier, vol. 276(C).
    4. Li, Zheng & Hensher, David A. & Zeng, Jingjing, 2022. "Travel choice behaviour under uncertainty in real-market settings: A source-dependent utility approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 168(C).
    5. Amanuel Hadera & Tewodros Tadesse, 2023. "Risk and ambiguity aversion: Incentives or disincentives for adoption of improved agricultural land management practices?," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 867-883, November.
    6. Gebremedhin, Bereket & Tadesse, Tewodros & Hadera, Amanuel & Tesfay, Girmay & Rannestad, Meley Mekonen, 2023. "Risk preferences, adoption and welfare impacts of multiple agroforestry practices," Forest Policy and Economics, Elsevier, vol. 156(C).
    7. Händel, Philipp Daniel & Namuyiga, Dorothy Birungi, 2024. "Impact of externalities on fishers' risk-taking decisions: Evidence from an experimental study at Lake Victoria, Uganda," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    8. Kaywana Raeburn & Sonia Laszlo & Jim Warnick, 2023. "Resolving ambiguity as a public good: experimental evidence from Guyana," Theory and Decision, Springer, vol. 95(1), pages 79-107, July.

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    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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