Sammanfattning

Purpose – People’s tendency to overestimate their ability to control random events, known as illusion of control, can affect financial decisions under uncertainty. This study developed an artifactual field experiment on illusion of control for a farm machinery investment. Design/methodology/approach – In an experiment with two treatments, the individual farmer was either given or not given a sense of control over a random outcome. After each decision, the authors elicited perceived control, and a questionnaire collected additional indirect measures of illusion of control from 78 German farmers and 10 farm advisors. Findings – The results did not support preregistered hypotheses of the presence of illusion of control. This null result was robust over multiple outcomes and model specifications. The findings demonstrate that cognitive biases may be small and difficult to replicate. Research limitations/implications – The sample is not representative for the German farming population. The authors discuss why the estimated treatment effect may represent a lower bound of the true effect. Originality/value – Illusion of control is well-studied in laboratory settings, but little is known about the extent to which farmers’ behavior is influenced by illusion of control.

Nyckelord

Risk and uncertainty; Behavioral finance; Superstition; Framed field experiment; Artifactual field experiment

Publicerad i

Agricultural Finance Review
2022, Volym: 82, nummer: 4, sidor: 675-689

SLU författare

• Lagerkvist, Carl-Johan

  • Institutionen för ekonomi, Sveriges lantbruksuniversitet
    

• Rommel, Jens

  • Institutionen för ekonomi, Sveriges lantbruksuniversitet
    

UKÄ forskningsämne

Företagsekonomi
Nationalekonomi


Publikationens identifierare

DOI: https://doi.org/10.1108/AFR-09-2020-0140

Permanent länk till denna sida (URI)

https://res.slu.se/id/publ/113333