An experiment on the link between risk preferences and the willingness to become a farmer

Abstract

This study investigates the link between risk preferences of agricultural students and their willingness to become a farmer. We conducted an incentivized experiment with 577 students of an agricultural university in Indonesia. Discriminating between alternative theories of decision‐making under risk, we find that students' risk preferences behave in accordance with cumulative prospect theory, but risk preferences are not predictive of students' willingness to become a farmer. Framing the experimental lottery task in either an agricultural or a general entrepreneurship context does not alter the predictive power for the willingness to become a farmer. Our results contribute to the debates on risk and farm generational renewal, as well as the (lack of) parallelism in behavioral field experiments.