Moral Hazard: Experimental Evidence from Tenancy Contracts
Last registered on June 18, 2018

Pre-Trial

Trial Information
General Information
Title
Moral Hazard: Experimental Evidence from Tenancy Contracts
RCT ID
AEARCTR-0003016
Initial registration date
June 14, 2018
Last updated
June 18, 2018 10:37 AM EDT
Location(s)
Region
Primary Investigator
Affiliation
Other Primary Investigator(s)
PI Affiliation
Save the Children
PI Affiliation
IIES, Stockholm
PI Affiliation
IIES, Stockholm
Additional Trial Information
Status
Completed
Start date
2013-07-01
End date
2015-03-31
Secondary IDs
Abstract
Agricultural productivity is particularly low in developing countries. Output sharing rules that make farmers less-than-full residual claimants of their produce are seen as one of the main drivers of low agricultural productivity. We conduct a field experiment designed to estimate and understand the effects of sharecropping contracts on agricultural input choices, risk-taking, and output. The experiment induces variation in the terms of sharecropping contracts. After agreeing to pay 50% of their output to the landlord, tenants are randomized into three groups: (i) some keep 50% of their output; (ii) others keep 75%; (iii) others keep 50% of output and receive a lump sum payment at the end of their contract, either fixed or stochastic. These treatments are designed to be able to estimate the effects of a higher share, a higher income, and higher risk-exposure on the end points of interest.
External Link(s)
Registration Citation
Citation
Burchardi, Konrad et al. 2018. "Moral Hazard: Experimental Evidence from Tenancy Contracts." AEA RCT Registry. June 18. https://www.socialscienceregistry.org/trials/3016/history/30926
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Experimental Details
Interventions
Intervention(s)
Intervention Start Date
2014-03-01
Intervention End Date
2015-01-31
Primary Outcomes
Primary Outcomes (end points)
Agricultural output from the experimental plots, inputs used on the plots (e.g. labor, fertilizer, insecticide, tools), crop choice.
Primary Outcomes (explanation)
In order to measure agricultural output from the experimental plots, we conduct a plot level survey of yields shortly before maturity of the crops. For this survey we hire students of agriculture as enumerators. They measured the size of plots and its parcels using GPS trackers. In order to assess the output, they place 1.5m x 1.5m quadrants on representative sections of the plot's parcels (8 quadrants per acre), and record detailed plant characteristics within each quadrant. Further they are trained to assess the expected output at harvest time for every plant in every quadrant. We also collect prices from local markets.
Secondary Outcomes
Secondary Outcomes (end points)
Farmers' socio-economic status (income, consumption, savings, assets); soil quality of the experimental plots.
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
We collaborate with the NGO BRAC in Uganda to induce variation in tenancy contracts. BRAC leases plots of land to women from low socio-economic backgrounds who are interested in becoming farmers and provides them with agricultural training and a package of seeds for cultivation. In all villages, tenant farmers are contracted for one season under a sharecropping contract that gives them a 50% stake in the output. After signing the contract, villages are randomized into three groups. In the first group (Control), the contract is maintained -- i.e. tenants keep 50% of their output. In the second group (T1), tenants are offered to keep 75% of the output. Tenants in a third group (T2) keep the same output share as in control (50%) but receive an additional fixed payment which is independent of their output level, paid at harvest and announced at the same time as T1 received news of the higher share. Within this third group, half of the tenants (T2A) receive it as a risk-free cash transfer while the other half receive part of their additional payment as a lottery (T2B), the expected payment in T2A and T2B being the same. The plots are visited pre-harvest to measure output levels and crop choice; and all tenants are surveyed shortly after the harvest to record their input use, such as labor, fertilizer, and tools.

The experiment is implemented across two agricultural seasons of 2014, spanning from March to July (Season 1) and September 2014 to January 2015 (Season 2). In both of these seasons the plots are advertised under a 50% sharecropping contract, and the tenants sign that contract during the first training session. The contract is valid for 1 season only. Tenants sign that contract at the start of the agricultural season.
Experimental Design Details
Randomization Method
The randomization is conducted at the village level. We group the 300 villages originally designated as potential study sites into clusters of three villages (henceforth referred to as `blocks'), with the heuristic objective to minimize within-block geographic distance. The study groups are typically geographically bunched. We also group villages into these large clusters (henceforth referred to as `strata'). Assignment to treatment is randomized at the village level. We assign equal fractions of the 300 potential study villages to each treatment condition, stratified by blocks. Within T2 clubs we assign 50 clubs to T2A and T2B, respectively, stratified by strata. The randomization is done by researchers in an office, using a computer.
Randomization Unit
Unit of randomization was a village.
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
300 villages
Sample size: planned number of observations
300 tenant farmers
Sample size (or number of clusters) by treatment arms
100 villages in Control, 100 villages in T1, 50 villages in T2A and 50 villages in T2B.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Ethics Committee of Bocconi University
IRB Approval Date
2014-03-17
IRB Approval Number
N/A
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
January 31, 2015, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
March 31, 2015, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
194 villages
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
228 farmers in season 1, 192 farmers in season 2
Final Sample Size (or Number of Clusters) by Treatment Arms
63 villages in Control, 65 villages in T1, 31 villages in T2A and 34 villages in T2B.
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
No
Reports and Papers
Preliminary Reports
Relevant Papers
Abstract
Citation
Burchardi, K., S. Gulesci, B. Lerva and M. Sulaiman (2017), "Moral Hazard: Experimental Evidence from Tenancy Contracts" CEPR Working Paper DP12232