In the first year, we randomized subsidy policies at the village level by offering either a partial subsidy of 70% of the actuarially fair price or a full subsidy. The product was first offered with as 70% subsidy, and two days later 62 randomly selected villages were surprised with an announcement that the insurance will be offered for free to all, regardless of whether they had agreed to buy it or not at the initial price. These villages are called the "free sample," while the remaining 70% subsidy villages are called the "non-free sample."
In the second year, we randomly assigned eight prices to the product at the household level, with subsidies ranging from 40% to 90%. This creates eight different price treatment subgroups. Except for the price, everything else remained the same in the insurance contract as in the first year. Only two or three different prices were assigned within each village.
In both years, we offered information sessions about the insurance policy to farmers, in which we explain the insurance premium, the amount of government subsidy, the responsibility of the insurance company, the maximum payout, the period of coverage, the rules for loss verification, and the procedures for making payouts. Households made their insurance purchase decision immediately after the information session. In
the second-year information session, we also informed farmers of the list of people in the village who were insured and of the payouts made during the first year at both the household and village level.