Technology Adoption Under Uncertainty: Take-Up and Subsequent Investment in Zambia

53 Pages Posted: 3 Aug 2015 Last revised: 4 Jan 2021

See all articles by B. Kelsey Jack

B. Kelsey Jack

Tufts University - Department of Economics; National Bureau of Economic Research (NBER)

Paulina Oliva

University of California, Santa Barbara (UCSB) - Department of Economics

Christopher Severen

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Elizabeth Walker

NERA Economic Consulting (UK)

Samuel Bell

Oregon State University

Date Written: July 2015

Abstract

Many technology adoption decisions are made under uncertainty about the costs or benefits of subsequent investments in the technology after the initial take-up. As new information is realized, agents may prefer to abandon a technology that appeared profitable at the time of take-up. Low rates of follow-through (engagement in subsequent investments) are particularly problematic when subsidies are used to increase adoption, in part because they may attract users with a lower value for the technology. We use a field experiment with two stages of randomization to generate exogenous variation in the payoffs associated with taking up and following through with a new technology: a tree species that provides private fertilizer benefits to adopting farmers. Our empirical results show high rates of abandoning the technology, even after paying a positive price to take it up. The experimental variation offers a novel source of identification for a structural model of intertemporal decision making under uncertainty. Estimation results indicate that the farmers experience idiosyncratic shocks to net payoffs after take-up, which increase take-up but lower average per farmer tree survival. We simulate counterfactual outcomes under different levels of uncertainty and observe that subsidizing take-up of the technology affects the composition of adopters only when the level of uncertainty is relatively low. Thus, uncertainty provides an additional explanation for why many subsidized technologies may not be utilized even when take-up is high.

Suggested Citation

Jack, B. Kelsey and Oliva, Paulina and Severen, Christopher and Walker, Elizabeth and Bell, Samuel, Technology Adoption Under Uncertainty: Take-Up and Subsequent Investment in Zambia (July 2015). NBER Working Paper No. w21414, Available at SSRN: https://ssrn.com/abstract=2638965

B. Kelsey Jack (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Paulina Oliva

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

Christopher Severen

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Elizabeth Walker

NERA Economic Consulting (UK) ( email )

15 Stratford Place
London, W1C 1BE
United Kingdom

Samuel Bell

Oregon State University ( email )

United States

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