MetaTOC stay on top of your field, easily

Investing Today or Tomorrow? An Experimental Approach to Farmers’ Decision Behaviour

,

Journal of Agricultural Economics

Published online on

Abstract

An understanding of farmers’ decision‐making behaviour is important for adequate forecasts as well as policy recommendations regarding structural changes. We experimentally analyse the investment behaviour of real farmers. The observed investment decisions are contrasted with theoretical benchmarks from classical investment theory and the real options approach. Our results show that both theories cannot exactly explain investment behaviour. However, farmers learn from former investment decisions and do consider the value of waiting over time.