Journal Article

Overconfidence and Risk-taking in the Field: Evidence from Ethiopian Farmers


  • Toman Barsbai
  • Ulrich Schmidt
  • Ulrike Zirpel
Publication Date

We argue that overconfidence wrongly inflates the expected returns to a risky income-generating activity. Overconfidence thus increase the willingness to take risks. We test this prediction using a sample of small-holder farmers from Ethiopia who face a risk-return tradeoff in their crop cultivation choices. To meet their subsistence needs, these risk-averse farmers arguably have large incentives to wisely manage their risks ...

Kiel Institute Expert



Key Words

  • Ethiopia
  • overconfidence
  • risk-taking
  • Selbstüberschätzung