Contract Farming in Developing Countries - A Behavioral Perspective on Contract Choice and Compliance

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1.1.1 Economic Development and the formalization of economic exchange

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1.1.2 Contract Farming as a tool for market integration and pro-poor development

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1.1.3 Challenges in Contract Farming: Participation and Compliance

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1.2.1 Contract choice and compliance: A question of (monetary) incentives and transaction costs?

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1.2.2 Incentives, motivations and preferences: The Behavioral View

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1.3.1 Discrete Choice Experiments

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1.3.2 Lab experiments

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1.4.1 Ghanaian students and farmers as target population

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1.4.2 Chapter 2: Contract Choice and Preference Heterogeneity

1.4.3 Chapter 3: Contract Compliance and reference-dependent preferences

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2.3.1 Sample

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Cape Coast Area

(Mfantseman and Elmina)

2.3.2 Behavioral Preferences

𝜃

11

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𝛿

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2.3.3 Choice Experiment Design

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Empirical Strategy

𝛽 𝛽

𝛽 =

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𝛽

𝛿

×

× ×

×

× ×

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𝛽 𝛽

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2.4.1 Descriptive statistics

Socio-economic characteristics of the sample

Characteristics of market transactions

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p < 0.001 p < 0.001 p < 0.001 p < 0.001

p < 0.001 p <0.001 p= 0.015

p < 0.001

p < 0.001 p = 0.807 p < 0.001

p < 0.001

p<0.001

Preferences

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mean sd Trust level (Money sent to stranger) 3.21 2.46

Money invested in future 5.35 3.88

Risk-averse 0.63

Risk-neutral 0.16

Risk-seeking 0.21

0510152025

Percent

0 2 4 6 8 10

Trust level (Money sent to stranger)

05101520

Percent

1 2 3 4 5 6

1-4=riskaverse, 5=riskneutral, 6=riskseeking

0102030

Percent

0 2 4 6 8 10

Money invested in future

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2.4.2 Estimation results Mixed Logit results

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Willingness to pay and Latent Class Analysis

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𝜃_𝑖 𝛿_𝑖

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2.7.1 Choice Card Example

Alternative 1 Producing MD2 under market channel A (Training provided) Farmer and buyer agree on purchase before harvestPrice for Grade AFarmer cannot sell Grade B to same buyer

Rejection only at field possiblePayment immediately after purchase Alternative 2 Producing MD2 under market channel B (Training provided) Farmer and buyer agree on purchase before planting Price for Grade AFarmer can sell Grade B to same buyer Rejection at field and company/ pack house possible

Payment 4 weeks after purchase Alternative 3NONE OF THESE (My current market channel for pineapples is better.)

60 p/ Kg

35 p/ Kg 50 p/ Kg

35 p/ Kg

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2.7.2 Experimental Instructions

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3.3.1 Individual expectation bias and investment game

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3.3.2 Experimental treatment for manipulating expectations

3.3.3 Discussion of Design Decisions

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3.3.4 Individual preferences and ex post survey

α

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3.3.5 Subjects, Payments and Procedures

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∙ ∙

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∙ ∙

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3.5.1 Descriptive Statistics

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𝜒²

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3.5.2 Estimation results

Do biased expectations affect contract breach?

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ε

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Does the effect of biased expectations stem from internalized losses?

𝑋_𝑖.𝑜 𝑋_𝑖.𝑢

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λ

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Does the occurrence of shocks facilitate contract breach?

χ

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3.9.1 Tables and Figures

χ

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