University of Illinois Urbana-Champaign

Ambiguity and credence quality: Implications for technology adoption

Norton, Benjamin Prescott

Content Files
NORTON-THESIS-2020.pdf

Permalink

https://hdl.handle.net/2142/108488

Description

Title
Ambiguity and credence quality: Implications for technology adoption
Author(s)
Norton, Benjamin Prescott
Issue Date
2020-07-21
Director of Research (if dissertation) or Advisor (if thesis)
Michelson, Hope
Committee Member(s)
  • Manyong, Victor
  • Winter-Nelson, Alex
  • Crost, Benjamin
Department of Study
Agr & Consumer Economics
Discipline
Agricultural & Applied Econ
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
M.S.
Degree Level
Thesis
Date of Ingest
2020-10-07T20:59:51Z
Keyword(s)
  • Development
  • agriculture
  • inputs
  • beliefs
  • Tanzania
  • Sub-Saharan Africa
  • quality
  • experimental economics
Abstract
Use of fertilizer and hybrid seed remains low in much of Sub-Saharan Africa. A possible contributor to low adoption is that farmers are uncertain about the quality of agricultural inputs available to them. While previous studies have shown that risk and uncertainty preferences are relevant to the decision to adopt a technology, existing research assumes that farmers have homogeneous beliefs about the quality of available inputs. I test this assumption using an incentivized Becker-DeGroot-Marschack auction in Tanzania and examine how farmer beliefs about mineral fertilizer quality in local markets influence their willingness-to-pay. I find that farmers are willing to pay 46% more for fertilizer that was laboratory tested and found to be pure than for untested fertilizer. Farmers who believe that more of the fertilizer for sale in their local market is low in quality are willing to pay a higher premium for laboratory-tested pure quality fertilizer, compared to untested fertilizer. Yet these results present something of a puzzle, given that three rounds of testing of fertilizer for sale in regional markets over five years have demonstrated that the nutrient content of fertilizer for sale in these contexts is consistently at or near advertised levels. Farmers appear to believe that low-quality fertilizer is far more prevalent in proximate markets than it actually is. How have farmers’ incorrect beliefs persisted in equilibrium? I posit two interconnected mechanisms. First, misattribution: Yields are stochastic due to weather and other factors, and when a yield in a particular year is unusually low, farmers misattribute noise as indicative of low-quality fertilizer. Second, farmers experience both risk (uncertainty about whether a bag of fertilizer is bad) and ambiguity (uncertainty about the likelihood a bag of fertilizer is bad), and thus hold multiple priors. I develop a Bayesian learning model that incorporates both misattribution and multiple priors and show that in equilibrium beliefs do not converge to the truth. Supporting the model's findings, I use farmer survey data from Uganda to establish that historic precipitation variability relates to farmers’ fertilizer quality belief distributions. I use the learning model to simulate several policy interventions, and show that subsidies, information campaigns, and plot-specific fertilizer recommendations improve beliefs, but do not cause beliefs to fully converge to the truth. Instead, policy makers should consider programs that address the misattribution problem.
Graduation Semester
2020-08
Type of Resource
Thesis
Permalink
http://hdl.handle.net/2142/108488
Copyright and License Information
Copyright 2020 by Benjamin Prescott Norton. All rights reserved.

Owning Collections

Graduate Dissertations and Theses at Illinois PRIMARY
Graduate Theses and Dissertations at Illinois
Dissertations - Agricultural and Consumer Economics