Risk Aversion and Varieties Selection: An Analysis Based on Information Asymmetry

Abstract

Using the experimental economics method, this study measures the risk aversion of cotton farmers. Based on the survey data, we analyze the influence of risk aversion on farmers' varieties selection behavior. It is found that the degree of risk aversion has a significant positive effect on the number of varieties and a negative effect on farmers' adoption of improved varieties with larger risks. Further, we find that technology promotion diminishes the effect of risk aversion on varieties diversification. We also confirm the effect of technology promotion given by enterprise is larger than that given by the government.

Keywords: Risk aversion, Technology promotion, Information asymmetry, Farmers' varieties selection