[2007] ENGLE-WARNICK, Jim; ESCOBAL, Javier; LASZLO, Sonia. Ambiguity aversion as a predictor of technology choice: experimental evidence from Peru. Montreal: Cirano. 38 p. Scientific series, 2007s-01.

The lack of adoption of new farming technologies despite known benefis is a well-documented phenomenon in development economics. In addition to a number of market constraints, risk aversion predominates the discussion of behavioral determinants of technology adoption.

We hypothesize that ambiguity aversion may also be a determinant, since farmers may have less information about the distribution of yield outcomes from new technologies compared with traditional technologies. We test this hypothesis with a laboratory experiment in the field in which we measure risk and ambiguity preferences. We combine our experiment with a survey in which we collect information on farm decisions and identify market constraints. We find that ambiguity aversion does indeed predict actual technology choices on the farm.