Behavioral study of farmers’ investment decisions

About the project

Farmers come across significant amount of uncertainty in their short and long term decisions. They deal not only with business risks but also financial risks. In this project we are interested in studying the behavior of farmers when making decisions about investments and loan distribution of repayments under uncertainty.

Research questions:

• Are farmers in Sweden affected by the illusion of control (IoC) bias in their financial decisions of loan repayment allocations?
• Which characteristics specific to the individual or to the situation have an influence on the illusion of control bias in financial decisions of farmers?

We are using behavioral and experimental economics approach to address the research questions. The experimental method consists of the data based questionnaire, where answers are incentivized with real economic payoffs.

Data collection will be finished in October 2012 and analysis will be performed thereafter. Results from the study can be used to develop a typology for understanding who is more likely to be affected by IoC and make erroneous decisions.

Project team:

Katarina Labajova, PhD student

Carl Johan Lagerkvist, Professor

Helena Hansson, Associate Professor