Circulation Expectations, Farmer Trust, and Farmers’ Contract Choice Behavior

Abstract

This study investigates the influence of expectations and trust on farmers’ decisions regarding contractual choices in land transfer. The dataset used for analysis consists of 1101 households in a province in western China. The research focuses on two aspects: the selection between written and oral contracts, and the decision to continue the contractual relationship. The findings reveal that farmers’ choices are significantly affected by their expectations and levels of trust. Specifically, when farmers’ expectations regarding the land transfer process are not met, they tend to prefer written contracts over oral ones. This preference can be attributed to the greater clarity and risk reduction offered by written contracts. On the other hand, higher levels of trust increase the likelihood of farmers continuing the land transfer contract, as trust fosters a sense of confidence and security in the ongoing relationship. Interestingly, trust also plays a moderating role. Farmers who have aligned expectations and high levels of trust are more inclined to opt for oral contracts. This preference for oral contracts can be attributed to their flexibility and emphasis on interpersonal relationships, allowing for better adaptation to the changing dynamics of land transfer. These findings contribute to a deeper understanding of the factors influencing farmers’ decision-making processes regarding contractual choices in land transfer. They provide valuable insights for policymakers involved in land transfer, enabling them to optimize policies and facilitate farmers’ decision-making processes.