Internal and External Validity of Farmers’ Risk and Uncertainty Preferences Elicited Using Contextualized Field Experiments: Evidence from Zimbabwe

Farming is a risky and uncertain activity and hence risk and uncertainty preferences are important determinants of farmers’ decisions. This paper explores the internal and external validity of farmers’ risk and uncertainty preferences elicited using contextualized field experiments in Zimbabwe. Each farmer is exposed to contextualized and non-contextualized lottery tasks. Contextualization is implemented for different crops to investigate the robustness of our findings. Results suggest that risk and uncertainty preferences elicited using contextualized tasks are not always consistent with those elicited via non-contextualized tasks. Non-contextualized tasks tend to overestimate the degree of risk and uncertainty aversion when compared to contextualized tasks. Results vary across crop contextualization and this finding is related the relevance of the crop to farmers. Preferences elicited using relevant crop contextualization are more internally valid than those elicited using non-contextualized tasks. Preferences are barely correlated with past and future farm decisions, regardless of whether tasks are contextualized or not. This implies a low level of external validity.