Technology Adoption under Uncertainty: Take-Up and Subsequent Investment in Zambia | Zendy

Paulina Oliva | Zendy; B. Kelsey Jack | Zendy; Samuel Bell | Zendy; Elizabeth Mettetal | Zendy; Christopher Severen | Zendy

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

Author(s) -

Paulina Oliva,

B. Kelsey Jack,

Samuel Bell,

Elizabeth Mettetal,

Christopher Severen

Publication year - 2019

Publication title -

the review of economics and statistics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 8.999

H-Index - 165

eISSN - 1530-9142

pISSN - 0034-6535

DOI - 10.1162/rest_a_00823

Subject(s) - profitability index , investment (military) , subsidy , economics , investment decisions , business , industrial organization , tree (set theory) , microeconomics , production (economics) , finance , market economy , mathematics , mathematical analysis , politics , political science , law

Technology adoption often requires multiple stages of investment. As new information emerges, agents may abandon a technology that was profitable in expectation. We use a field experiment to vary the payoffs at two stages of investment in a new technology: a tree species that provides on-farm fertilizer benefits. Farmer decisions identify the information about profitability that arrives between the take-up and follow-through stages. Results show that this form of uncertainty increases take-up but lowers average tree survival, decreasing the cost-effectiveness of take-up subsidies. Thus, uncertainty offers another explanation for why even costly technologies may go unused or be abandoned.

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