Demand for Options as Price Insurance

Last registered on August 04, 2026

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Pre-Trial

Trial Information

General Information

Title

Demand for Options as Price Insurance

RCT ID

AEARCTR-0019208

Initial registration date

August 03, 2026

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

August 04, 2026, 10:16 AM EDT

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

Locations

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Primary Investigator

Name

Jedediah Silver

Affiliation

Hebrew University of Jerusalem

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Other Primary Investigator(s)

PI Name

Daniel Maggio

PI Affiliation

Rutgers University

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PI Name

Daniel Agness

PI Affiliation

University of Maryland

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Additional Trial Information

Status

In development

Start date

2026-08-04

End date

2027-03-31

Keywords

Agriculture, Finance & Microfinance

Additional Keywords

JEL code(s)

O13, O16, G52

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

Maize prices in Malawi rise sharply between the harvest and the lean season, but the size of the increase varies widely across years, exposing both net buyers and net sellers to substantial price risk in their main staple. No standard financial product to insure rural households against this risk is widely available. We elicit incentivized willingness to pay (WTP) for maize options contracts — calls that cap the price households pay and puts that floor the price they receive — among 224 households in Zomba district, Malawi. Each household completes Becker–DeGroot–Marschak elicitations for six contracts covering the 2026-2027 lean season: calls and puts at each of three strike prices. One contract is then randomly selected and offered at a randomly drawn premium; households purchase coverage whenever their stated WTP weakly exceeds the draw, ensuring that households are choosing over real contracts. We separately elicit WTP to extend the coverage window, and we randomize whether the participation reward is delivered immediately or during the lean season, testing whether liquidity at the time of purchase constrains demand. Comparing WTP to actuarially fair premia computed from 22 seasons of market price data, as well as households' beliefs over the upcoming lean season's prices, provides a revealed-preference measure of the costs associated with seasonal price risk. If demand is sufficiently high, the results will inform the design of a subsequent randomized evaluation of the effects of options coverage on household consumption, storage, and marketing behavior.

External Link(s)

Registration Citation

Citation

Agness, Daniel, Daniel Maggio and Jedediah Silver. 2026. "Demand for Options as Price Insurance." AEA RCT Registry. August 04. https://doi.org/10.1257/rct.19208-1.0

Sponsors & Partners

Partner

Name

PALM Consulting Limited

Type

private_company

URL

https://palmconsulting.mw/

Experimental Details

Interventions

Intervention(s)

We offer options contracts to buy and sell maize during the lean season to rural Malawian households. A call contract gives a household the right, but not the obligation, to buy maize from a service provider at a pre-specified strike price during the lean season, capping its effective purchase price. A put contract gives the right to sell at a pre-specified floor price, guaranteeing a minimum sales price for households storing maize. Because the contracts are covered by physical grain stores held by the provider, they avoid the counterparty cash-flow problems that would make a traditional insurance instrument on prices infeasible.

This study is a demand-elicitation pilot that measures households' willingness-to-pay for the described contracts. Any downstream RCT will be registered and pre-specified separately before any endline data collection.

Intervention Start Date

2026-08-04

Intervention End Date

2026-08-31

Primary Outcomes

Primary Outcomes (end points)

Willingness to pay for options contracts, elasticity of demand with respect to strike price

Primary Outcomes (explanation)

Willingness to pay is measured via a real-stakes Becker-DeGroot-Marschak elicitation in which participants respond either affirmatively or negatively to a bisected price list. This elicitation is conducted over a set of contracts that vary in their type (put or call) and strike price. Following the conclusion of all elicitations, a contract is chosen at random alongside a contract premium. If the respondent's stated willingness to pay is weakly greater than the randomly chosen premium, they are granted the right to purchase the contract.

Secondary Outcomes

Secondary Outcomes (end points)

1. Elasticities of units of coverage purchased w.r.t premia, conditioning on winning; 2. Effect of participation-payment timing on demand; 3. Willingness to pay to extend the coverage window to include November and December; 4. Subjective price expectation coherence; 5. Heterogeneity by maize position; 6. Bunching around the incentive payment.

Secondary Outcomes (explanation)

1. We can also compute the elasticity of number of units of coverage purchased w.r.t. the premium, which is random conditional on WTP. We note that this is likely to be underpowered since it only applies to a maximum of 1 winning contract per household.
2. We allow households to at least partially purchase options out of survey incentive payments delivered at varied times. Roughly half of households will be given an incentive a week post-survey while others will be given an incentive during the subsequent lean season.
3. We ask households how much additional premium they would be WTP in order to extend each contract to cover November to March rather than January to March. Households are then presented with an offer purchase the additional covered if their stated WTP weakly exceeds a randomly drawn price. Since the ability to veto makes this elicitation not incentive compatible, it is left as secondary.
4. Eliciting households' beliefs about lean-season prices allows us to test whether their WTP for contracts is consistent with such beliefs. This would include a household who is willing to buy a call (put) at a strike price that is greater (less) than the maximum (minimum) price they believe can occur.
5. We test whether households with a strong buyer (seller) position, both realized last year and expected this year, are more WTP for calls (puts).
6. We test for bunching of households offering a contracts purchasing the maximum number of units that can be paid for out of the survey incentive. The randomized premium varies how many units this is for each household offered a contract. We note that this is a joint test of liquidity constraints and trust.

Experimental Design

The study elicits households’ willingness to pay for maize options contracts that vary in contract type and strike price. Contract presentation order is randomized, and one contract and premium are randomly selected for potential implementation, making the choices real-stakes. We also randomize the timing of survey participation payments and separately elicit demand for a longer coverage window. This pilot does not include an endline study of downstream outcomes.

Experimental Design Details

Not available

Randomization Method

Randomization built in to programmed survey

Randomization Unit

Participation-payment timing and presentation order are randomized at the respondent level. The contract and premium selected for implementation are randomized within respondent by the programmed survey.

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

28 villages

Sample size: planned number of observations

224 households, with 6 contract elicitations each.

Sample size (or number of clusters) by treatment arms

One contract to be selected per household; Approximately 112 households assigned to early or late survey incentive.

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Our main outcome is the level of demand, not an effect. The minimum detectable within-household arc elasticity of WTP with respect to the strike price is approximately 0.27, based on the within-household variability of WTP differences observed in piloting.

Supporting Documents and Materials

IRB