Abstract for: How do Zambian farmers allocate their budget? Evidence about dynamic decision-making based on a Cournot field experiment
Smallholder farmers in sub-Saharan African (SSA) recurrently face situations of complex and dynamic decision trade-offs, which include allocating money between short-term and long-term oriented production actives. Short-term oriented activities such as fertilizer application help to cover immediate food needs, however compromise on future food production. Long-term oriented production activities such as building up soil fertility are important systemic leverage points for future food production, however compromise on today’s harvests. This article uses a Cournot field experiment in Zambia to investigate dynamic farm management decision-making with conflicting production objectives in a dynamic context. The results reveal that, overall, Zambian smallholder farmers are biased towards short-term oriented production activities, which leads to a suboptimal performance in production. Despite this bias, farmers applied a variety of distinct dynamic and non-dynamic decision strategies with varying production outcomes. The production outcomes of some strategies were highly depended on the endogenous interaction with other strategies. Given the fertilizer bias, our findings suggest that a mind shift towards long-term oriented production activities is required to sustainably increase food production in SSA. The variety of decision strategies and their endogenous interaction reinforce the need of building adaptive capacity on smallholder farms to apply context specific decision strategies.