TY  - CPAPER 
AB  - Optimal timing of farmland investment represents fundamental decisions for agricultural entrepreneurs. It is known that the land price value is significantly higher than the expected present value of expected future gains. In this paper we experimentally analyze the investment behavior of real farmers and contrast the observed investment decisions with theoretical benchmarks of the classical investment theory and the Real Options Approach. Furthermore, we investigate framing effects. Our results show that the framing of the investment situation has no significant influence on the decision behavior in the experiment. Moreover, the investment behavior of farmers approximates the predictions of the Real Options Approach if they are given an equitable chance to learn from personal experience.
AU  - Maart, Syster Christin
AU  - Musshoff, Oliver
DA  - 2011
DA  - 2011
DO  - 10.22004/ag.econ.103693
DO  - doi
EP  - 26
EP  - 1
ID  - 103693
KW  - Agribusiness
KW  - Agricultural Finance
KW  - Farm Management
KW  - Financial Economics
KW  - Institutional and Behavioral Economics
KW  - Risk and Uncertainty
KW  - Experimental Economics
KW  - Investment
KW  - Real Options
L1  - https://ageconsearch.umn.edu/record/103693/files/AAEA_Maart.pdf
L2  - https://ageconsearch.umn.edu/record/103693/files/AAEA_Maart.pdf
L4  - https://ageconsearch.umn.edu/record/103693/files/AAEA_Maart.pdf
LA  - eng
LA  - English
LK  - https://ageconsearch.umn.edu/record/103693/files/AAEA_Maart.pdf
N1  - Replaced with revised version of paper 5/26/11.
N2  - Optimal timing of farmland investment represents fundamental decisions for agricultural entrepreneurs. It is known that the land price value is significantly higher than the expected present value of expected future gains. In this paper we experimentally analyze the investment behavior of real farmers and contrast the observed investment decisions with theoretical benchmarks of the classical investment theory and the Real Options Approach. Furthermore, we investigate framing effects. Our results show that the framing of the investment situation has no significant influence on the decision behavior in the experiment. Moreover, the investment behavior of farmers approximates the predictions of the Real Options Approach if they are given an equitable chance to learn from personal experience.
PY  - 2011
PY  - 2011
SP  - 1
T1  - Optimal Timing of Farmland Investment - An Experimental Study on Farmers' Decision Behavior -
TI  - Optimal Timing of Farmland Investment - An Experimental Study on Farmers' Decision Behavior -
UR  - https://ageconsearch.umn.edu/record/103693/files/AAEA_Maart.pdf
Y1  - 2011
ER  -