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Behavioral Aspects of Investment Decisions on Farms

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  • Smiglak-Krajewska, Magdalena

Abstract

The main purpose of this paper is to identify the behavioral factors that impact the investment decisions made by farm managers. A survey carried out in 2023 with 152 farms located in Greater Poland was the source of empirical materials. The study suggests that overconfidence and over-optimism are not widespread in the group surveyed. In assessing their own knowledge of investment topics, 74% of farmers claimed to be equally competent as other agricultural producers. When preparing the implementation of an investment, most respondents (47%) foresee a neutral scenario of how the situation could development, 20% for an optimistic scenario and only 13% pick a pessimistic one. Nearly 25% of interviewees admitted to rely on the brand’s reputation when choosing a fixed asset (the availability heuristic). The vast majority of farmers surveyed (65%) replied that investing their own funds requires a more in-depth analysis. This corroborates the conclusions made by Richard Thaler and Eric Johnson who discovered that people are less willing to risk their own hardearned money.

Suggested Citation

  • Smiglak-Krajewska, Magdalena, 2023. "Behavioral Aspects of Investment Decisions on Farms," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2023(3).
    • Handle: RePEc:ags:paaero:340045
    DOI: 10.22004/ag.econ.340045
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