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Investment behavior in agriculture - an analysis of the explanatory potential of the real options approach

dc.contributor.advisorMußhoff, Oliver Prof.
dc.contributor.authorTubetov, Dulatde
dc.titleInvestment behavior in agriculture - an analysis of the explanatory potential of the real options approachde
dc.contributor.refereeMußhoff, Oliver Prof.
dc.description.abstractengThe dissertation mainly consists of two articles: INVESTMENTS IN KAZAKHSTANI DAIRY FARMING: A COMPARISON OF THE CLASSICAL INVESTMENT THEORY AND THE REAL OPTIONS APPROACH Abstract This study analyzes the explanatory potential of the real options approach (ROA) regarding the reluctance of Kazakhstani farmers to invest in modern dairy farming. More precisely, it compares the valuation of the ROA with that of the classical investment criterion such as the net present value (NPV). A further objective is to analyze the sensitivity of investment triggers with respect to assumed stochastic processes. To do so, an option-pricing model, which combines the stochastic simulation and the parameterization of investment triggers, is suggested. The results reveal that the investment trigger given by the ROA is considerably higher than the one given by the NPV criterion. This verifies that the ROA has an explanatory potential for the reluctance of farmers to invest in modern dairy farming. In addition, it was found that the option-pricing results indicate a high sensitivity regarding different stochastic processes as well as risk attitudes. REAL OPTIONS OR NET PRESENT VALUE? AN EXPERIMENTAL APPROACH ON THE INVESTMENT BEHAVIOR OF KAZAKHSTANI AND GERMAN FARMERS Abstract Purpose – The objectives of our study are to compare the investment behavior of farmers in Kazakhstan as a transforming country and in Germany as a Western industrialized country as well as to analyze whether the investment behavior of farmers is consistent with the normative benchmarks of the net present value (NPV) approach or the real options (RO) approach. Design/methodology/approach – We conducted an experiment with 100 Kazakhstani and 106 German farmers. The first part of the experiment describes an investment opportunity in an agricultural and in a non-agricultural treatment. The second part refers to a Holt and Laury lottery to determine farmers’ risk attitude that could influence the investment behavior. Findings – Our results show that both approaches do not provide an exact prediction of the investment behavior of farmers. However, German farmers invest later than Kazakhstani farmers meaning that the investment behavior of German farmers is closer to the RO approach. This might imply that German farmers are more likely to take into account the value of flexibility when making investment decisions than Kazakhstani farmers. Further research – Since investment behavior is country-specific, it is worth investigating if farmers from other transforming countries would show different investment behavior compared to farmers from other Western industrialized countries. Furthermore, decision-making behavior related to investments could be different from that related to disinvestments. Therefore, it may be interesting to analyze the disinvestment decisions of farmers in transforming and Western industrialized countries. Practical implications – Our results show that it is not acceptable to apply the results of experiments investigating the investment behavior of entrepreneurs in a transforming country to entrepreneurs in a Western industrialized country and vice versa. Furthermore, training for farmers is needed because there is still room for improvement in order to achieve the RO benchmark. Finally, taking into account real options effects could improve the results of policy impact analysis. Originality – This is the first experimental study comparing the investment behavior of farmers from a transforming country and from a Western industrialized
dc.contributor.coRefereeCramon-Taubadel, Stephan von Prof.
dc.contributor.thirdRefereeHaen, Hartwig de Prof.
dc.subject.engreal optionsde
dc.subject.engstochastic processde
dc.subject.engdairy farm investmentde
dc.subject.enginvestment timingde
dc.affiliation.instituteFakultät für Agrarwissenschaftende
dc.subject.gokfullLand- und Forstwirtschaft (PPN621302791)de

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