The Effects of Risk and Ambiguity Aversion on Technology Adoption: Evidence from Aquaculture in Ghana

Crentsil, Christian and Gschwandtner, Adelina and Wahhaj, Zaki (2018) The Effects of Risk and Ambiguity Aversion on Technology Adoption: Evidence from Aquaculture in Ghana. Discussion paper. University of Kent (Full text available)

Abstract

We study how aversion to risk and ambiguity affects the adoption of new technologies by Ghanaian smallholder aquafarmers. We conduct a set of field experiments designed to elicit farmers’ risk and ambiguity preferences and combine it with survey based information on their technology adoption decisions. We find that aquafarmers who are more risk-averse were quicker to adopt the new technologies: a fast-growing breed of tilapia fish, extruded feed and floating cages. By contrast, ambiguity aversion has no effect on the adoption of the new tilapia breed and extruded feed. Furthermore, it slows down the adoption of floating cages - a technology which entails higher fixed costs than the others - and the effect is diminishing in the number of other adopters in the village. We argue that these differential effects are due to the fact that the technologies are risk-reducing, with potential ambiguity about their payoffs? distributions at the early stages of adoption. The findings highlight the importance of distinguishing between risk and ambiguity in investigating technology adoption decisions of small-holder farmers in developing countries.

Item Type: Monograph (Discussion paper)
Additional information: School of Economics Discussion Paper 18/14
Uncontrolled keywords: Uncertainty Aversion, Aquafarming, Technology Adoption, Extruded Feed, Floating Cages, Akosombo strain of Tilapia (AST)
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Adelina Gschwandtner
Date Deposited: 21 Jan 2019 14:27 UTC
Last Modified: 12 Mar 2019 18:56 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/71750 (The current URI for this page, for reference purposes)
Gschwandtner, Adelina: https://orcid.org/0000-0002-6952-1782
Wahhaj, Zaki: https://orcid.org/0000-0001-8285-7670
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