Moral Hazard: Experimental Evidence from Tenancy Contracts

S-Tier
Journal: Quarterly Journal of Economics
Year: 2019
Volume: 134
Issue: 1
Pages: 281-347

Authors (4)

Konrad B Burchardi (Stockholms Universitet) Selim Gulesci (Trinity College Dublin) Benedetta Lerva (not in RePEc) Munshi Sulaiman (not in RePEc)

Score contribution per author:

2.011 = (α=2.01 / 4 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Agricultural productivity is particularly low in developing countries. Output-sharing rules that make farmers less-than-full residual claimants are seen as a potentially important driver of low agricultural productivity. We report results from a field experiment designed to estimate and understand the effects of sharecropping contracts on agricultural input choices, risk-taking, and output. The experiment induced variation in the terms of sharecropping contracts. After agreeing to pay 50% of their output to the landlord, tenants were randomized into three groups: (i) some kept 50% of their output; (ii) others kept 75%; (iii) others kept 50% of output and received a lump-sum payment at the end of their contract, either fixed or stochastic. We find that tenants with higher output shares used more inputs, cultivated riskier crops, and produced 60% more output relative to control. Income or risk exposure have at most a small effect on farm output; the increase in output should be interpreted as an incentive effect of the output-sharing rule.

Technical Details

RePEc Handle
repec:oup:qjecon:v:134:y:2019:i:1:p:281-347.
Journal Field
General
Author Count
4
Added to Database
2026-01-25