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Risk, ambiguity and the adoption of new technologies: experimental evidence from a developing economy

  • Ross, Nicholas
  • Santos, Paulo
  • Capon, Timothy
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    The slow adoption of innovations in less developed countries has long been a puzzle, given the high expected returns. This paper investigates the role of ambiguity-aversion as a fundamental behavioral determinant of technology adoption, motivated by the fact that, almost by definition, farmers have less certain information about the outcomes of new technologies compared with traditional technologies. Using primary data from field experiments used to measure behavioral parameters such as risk and ambiguity aversion, we find that farmers' aversion to ambiguity (but not risk aversion) limits the adoption of new technologies, even when expected profits are quite high. Interventions that reduce uncertainty (in place of interventions that reduce risk) seem a promising way of speeding up the adoption of innovations.

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    File URL: http://purl.umn.edu/126492
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    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126492.

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    Date of creation: 2012
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    Handle: RePEc:ags:iaae12:126492
    Contact details of provider: Web page: http://www.iaae-agecon.org/
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