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 Selim Gulesci, Ph.D.

Bocconi University, Milan, Italy

Authors: Konrad Burchardi, Selim Gulesci, Benedetta Lerva, and Munshi Sulaiman

Abstract: We report results from a field experiment designed to estimate the effects of tenancy contracts on agricultural input choices, risk-taking, and output. The experiment induced variation in the terms of sharecropping contracts: some tenants paid 50% of output in compensation for land usage; others paid 25%; again others paid 50% of output and received cash, either fixed or stochastic. We find that tenants with higher output share utilized more inputs, cultivated riskier crops, and generated 60% more output relative to control. Cash transfers did not effect farm output. We interpret the increase in output as the incentive effect of sharecropping.

Full Text:  “Moral Hazard: Experimental Evidence from Tenancy Contracts”