DFG research unit SiAg 2010-2014
Structural Change in Agriculture
Objectives
This research unit takes a fresh look on structural change in agriculture in developed economies. The overall objective is the refinement, the extension and the integration of existing concepts, theories and instruments that facilitate the analysis of economic adjustment processes in the agricultural sector. In the frame of this research unit, the Institute for Entrepreneurship is responsible for subproject 1, dealing with entrepreneurial decision making, more precisely: Agricultural entrepreneurs’ decision making and structural change: An experimental approach.
The rational calculus assumed in most economic models is quite unrealistic and not predictive of economic agents’ decision-making. This statement holds for the existing literature on structural change in agriculture: based on a quite abstract characterization of agricultural entrepreneurs and not fully reflective of their actual decision-making. Hence, the understanding of structural change in agriculture can be improved via a realistic modeling of the decision-making of agricultural entrepreneurs. Applying and extending psychological and decision-oriented approaches from entrepreneurship research will help to better predict farmers’ behavior and choices. Economic experiments are important to evaluate the predictive power of such approaches and to test them against economic benchmark models.
The underlying paradigm of our research is that of bounded rationality. With the overall aim of elaborating implications for regulatory agencies, this project seeks at modeling decision-making in scenarios relevant for farming. It thus aims at overcoming the quite abstract characterization of the agricultural entrepreneur in the agricultural economics literature, at applying entrepreneurship research to farming and farmers in general, as well as generating experimental evidence on farmers’ decision-making, which is missing.