Simultaneous production decisions in agricultural contexts

Farmers often decide simultaneously on crop production or input use without knowing other farmers’ decisions. Anticipating the behavior of other farmers can increase financial performance. This paper investigates the role of other famers’ behaviors and other contextual factors in farmers’ simultaneous production decisions.
Market entry games are a common method for investigating simultaneous production decisions. However, so far they have been conducted with abstract tasks and by untrained subjects. We extend market entry games by using three real contexts, pesticide use, animal welfare, and wheat production, in an incentivized framed field experiment with 323 German farmers.
We find that farmers take different decision under identical incentive structures for the three contexts. While context plays a major role in their decisions, their expectations about the behavior of other farmers have little influence on their decision.