A field experiment on the impact of weather shocks and insurance on risky investment
By Ruth Vargas Hill, A. Viceisza. Experimental Economics, 2011
150 citations recorded by the source corpus.
We conduct a framed field experiment in rural Ethiopia to test the seminal hypothesis that insurance provision induces farmers to take greater, yet profitable, risks. Farmers participated in a game protocol in which they were asked to make a simple decision: whether or not to purchase fertilizer and if so, how many bags. The return to fertilizer was dependent on a stochastic weather draw made in each round of the game. In later rounds a random selection of farmers made this decision in the presence of a stylized weather-index insurance contract. Insurance was found to have some positive effect on fertilizer purchases. Purchases were also found to depend on the realization of the weather in the previous round. We explore the mechanisms of this relationship and find that it may be the result of both changes in wealth weather brings about, and changes in perceptions of the costs and benefits to fertilizer purchases.
Subfields: Gender Studies, Safety Research, Soil Science
View Paper: https://www.semanticscholar.org/paper/7294b60ec65023884128762dead005dc3a2d816a
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Gender Studies
In Safety Research
In Soil Science
Citations in the corpus
- Contract farming and smallholder incentives to produce high quality: experimental evidence from the Vietnamese dairy sector (2013, background): “This would have been necessary if the realization of events was truly random and subjects maintained a heuristic understanding of probabilities (e.g., Hill and Viceisza, 2011).”