My neighbour as myself? An experimental investigation of spatial patterns of risk preferences among smallholder farmers

Farmers could be spatially clustered according to their risk attitude. Previous studies neither investigated such effects nor incorporated spatial terms in models examining risk preferences and attitudes. We examined decision-making under risk using a lottery-task experiment and then measured spatial patterns through spatial autocorrelation analysis and spatial regression models. The results indicate that there is a significant neighbourhood effect among farmers in the region. Specifically, farmers in proximity exhibit similar risk preferences. We tested the implication of the spatially distributed risk preferences on self-confidence and found that willingness to take risks has a significant positive relationship with confidence in making adoption decisions. Failing to account for spatial distribution may have ramifications for interventions and policies as the opportunity for integration of mechanisms better suited for neighbourhood specific risk preferences may be missed.