Contract Structure, Time Preference, and Technology Adoption

66 Pages Posted: 17 Aug 2020

See all articles by Shyamal Chowdhury

Shyamal Chowdhury

The University of Sydney

Joeri Smits

affiliation not provided to SSRN

QIGANG SUN

Yale University

Abstract

Do constraints to technology adoption vary by behavioral traits? We randomize 150 villages in Bangladesh into being offered standard microcredit, loans with a grace period, the choice between those two contracts, and control. No discernible average effects are detected on the adoption of mechanized irrigation, hybrid seeds, and chemical fertilizers. However, credit access enhances technology adoption among present-biased farmers, whose output and profits increase. These effects are driven by the standard contract and choice villages, as present-biased farmers select out of the grace period contract. This suggests offering commitment and screening applicants on present bias to enhance agricultural technology adoption.

Keywords: microfinance, technology adoption, time inconsistency, Bangladesh

JEL Classification: D15, G51, O13, O33, Q14, Q16

Suggested Citation

Chowdhury, Shyamal and Smits, Joeri and SUN, QIGANG, Contract Structure, Time Preference, and Technology Adoption. IZA Discussion Paper No. 13590, Available at SSRN: https://ssrn.com/abstract=3674311 or http://dx.doi.org/10.2139/ssrn.3674311

Shyamal Chowdhury (Contact Author)

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

Joeri Smits

affiliation not provided to SSRN

QIGANG SUN

Yale University

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