Practice Job Talk: The Farmer and The Fates: Perceptions of Self-efficacy, Learning, and Investment in a Stochastic Production Process

• Development Workshop

Date and Location

Tuesday, October 24, 2017, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

Understanding when individuals choose to exert effort and how they learn from their experiences is a fundamental question in economics. This paper adds to the discussion by studying the role of locus of control – a measure of the extent to which decision makers believe outcomes are influenced by their own actions and those of external factors – in the investment and learning process. Using analytical and simulation-based models, incorrect control beliefs are shown to lead to sub-optimal investment behavior and a learning process that differs from standard learning-by-doing models. These hypotheses are then tested empirically, using data from a context in which both investment decisions and external influences have extreme consequences for household welfare: rainfed maize production in Mozambique and Tanzania.