CLTS Working Papers, Centre for Land Tenure Studies, Norwegian University of Life Sciences
Tools, Fertilizer or Cash? Exchange Asymmetries in Productive Assets
() and Sosina Bezu
Abstract: We used a field experiment to investigate exchange
asymmetries in productive assets among poor rural respondents in Ethiopia.
Farmers were randomly allocated two types of productive assets or cash,
with a choice to keep the productive asset (cash) or exchange it for cash
(productive asset). To introduce productive asset variation, a durable
asset (farm tool) and a short-term input (fertilizer) were randomly
allocated and combined with a random amount of cash. Loss aversion was
proxied with a separate experiment and was used to assess the importance of
endowment effect theory to explain exchange asymmetries. A greater exchange
asymmetry was found for the more popular tool than for fertilizer. Loss
aversion could explain a small but significant part of the exchange
asymmetry in tools, but experience did not reduce the exchange asymmetry.
Compared to the female respondents, the male respondents exhibited greater
exchange asymmetries and more non-linear price responses with declining
elasticities as prices increased. Key words: exchange asymmetry, endowment
effect, loss aversion, factor markets, productive assets, input demand
elasticities, field experiment. JEL codes:
Keywords: exchange asymmetry; endowment effect; loss aversion; factor markets; productive assets; input demand elasticities; field experiment.; (follow links to similar papers)
JEL-Codes: D03; D51; O13; Q12; (follow links to similar papers)
34 pages, December 3, 2014
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