Liquidity and incentives for experimentation with agricultural technology

Last registered on July 29, 2024
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Pre-Trial

Trial Information

General Information

Title
Liquidity and incentives for experimentation with agricultural technology
RCT ID
AEARCTR-0014041
Initial registration date
July 25, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
July 29, 2024, 5:23 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

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Primary Investigator

Name
Carolina Kansikas
Affiliation
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Other Primary Investigator(s)

PI Name
Hasan Alperen Tosun
PI Affiliation
University of Warwick
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Additional Trial Information

Status
In development
Start date
2024-07-22
End date
2026-02-01
Keywords
Agriculture, Behavior, Finance & Microfinance, Firms & Productivity
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study demand for incentive schemes to foster agricultural technology adoption. In particular, we examine the relevance of asset market liquidity as a barrier for farmers who may be willing to experiment with new technologies (small mechanization assets). We define the liquidity of an asset as its ability to be realized as cash-on-hand. We elicit incentivized willingness to pay for a `buyback guarantee' scheme, the closest policy equivalent to easing the asset market liquidity constraint without affecting alternative channels. We use three types of small machinery (used at different stages of the crop cycle) that have been shown to increase agricultural yields in this context and elicit demand for the `buyback guarantee’.

We first quantify the relevance of this constraint through the willingness to pay exercise (Becker-Degroot-Marshak mechanism) in a method similar to the one in Berry et al (2020). We further try to understand factors that affect valuation from the perspective of environmental variability, uncertainty about assets’ returns, and preferences.

We complement the elicitation with a randomized survey experiment (where liquidity is randomly assigned to an asset) and measurement of perception of asset characteristics (returns, perceived liquidity, prices) for both assets individuals own, and the three investment assets used for the buyback.
External Link(s)

Registration Citation

Citation
Kansikas, Carolina and Hasan Alperen Tosun. 2024. "Liquidity and incentives for experimentation with agricultural technology." AEA RCT Registry. July 29. https://doi.org/10.1257/rct.14041-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We conduct a survey among approximately 600 farmers in rural Central Kenya to elicit the following:
(i) Survey to elicit perceptions of liquidity, returns and prices of three small mechanization assets;
(ii) Incentivized willingness to pay for the buyback guarantee;
(iii) Survey experiment with random allocation of liquidity profiles to assets (assignment to equal vs. higher liquidity script).
Intervention Start Date
2024-07-22
Intervention End Date
2024-08-10

Primary Outcomes

Primary Outcomes (end points)
Willingness to pay for buyback scheme, Perception of asset returns (productivity), prices and liquidity, Allocation of KES in randomized survey experiment. We will investigate the factors leading to higher willingness to pay for buybacks, in particular, exposure to environmental shocks, uncertainty in returns to the machinery, strength of existing resale networks.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Perception of suppliers offering buyback guarantees, Increases in probability of investment in presence of buyback guarantee.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We use a sample of 600 farmers in rural Central Kenya. We estimate demand (willingness to pay) for a buyback guarantee of a period of six months that would enable farmers to resell a machine the buy to the shop within the guarantee period, for a price accounting for depreciation and determined by a third-party evaluation. We tie the promotion to three types of machinery and elicit willingness to pay for the guarantee based on individuals' preferred machinery. We use a Becker-Degroot-Marshak mechanism to elicit willingness to pay for the buyback guarantee. Incentivization is implemented by offering the buyback promotion through a lottery.

Willingness to pay is elicited as a price in KES but we will use willingness to pay as a share of machinery price for the purpose of analysis.
Experimental Design Details
Not available
Randomization Method
Public lottery for willingness-to-pay elicitation, randomization done in office by a computer for incentive assignment, coin toss for the survey experiment.
Randomization Unit
Individual.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
N/A.
Sample size: planned number of observations
600 is the target but there may be deviations as enumerators are hired by the day.
Sample size (or number of clusters) by treatment arms
Target is 600, however there may be some deviations from this as enumerators are hired by the day.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
HSSREC University of Warwick
IRB Approval Date
2024-05-22
IRB Approval Number
105-23/24
Analysis Plan