Tax or green nudge? An experimental analysis of pesticide policies in Germany

Matthias Buchholz · Oliver Mußhoff

1 citations0/0 files storedEuropean Review of Agricultural Economics

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Decision-Making and Behavioral Economics Agricultural Economics and Policy Experimental Behavioral Economics Studies

Abstract

Abstract We use a business management game to investigate how a pesticide tax and a green nudge affect crop, tillage and pesticide decisions for a virtual farm. Results from German farmers reveal that both policies can reduce pesticide applications. The pesticide tax involves a substantial profit loss. Unlike in the green nudge scenario, participants under pesticide tax adjust their cropping and tillage strategies. We compare farmers’ decisions to those made by a mathematical programming model. Assuming profit maximisation would overestimate farmers’ response to the tax and underestimate the effectiveness of the nudge.

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References

1979Prospect Theory: An Analysis of Decision under Risk 1974Judgment under Uncertainty: Heuristics and Biases 1992Advances in prospect theory: Cumulative representation of uncertainty 1994Investment under Uncertainty 1988Status quo bias in decision making 1991Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias 2010Heuristic Decision Making 1982A theory of anticipated utility

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