Behavioural Economics of Agricultural Technology Adoption: Loss Aversion, Reference Points, and Extension Design in Nigeria

This study applies behavioural economics frameworks to agricultural technology adoption in Nigeria, developing and empirically testing an original model of adoption behaviour that incorporates prospect theory, reference point formation, and social norm effects that are absent from standard expected utility adoption models. Field experiments and observational evidence from Nigerian smallholder farming communities consistently show adoption patterns that deviate from rational expected utility predictions, including excessive loss aversion relative to gain sensitivity, status quo bias in variety choice, and strong social norm influences on technology decisions. This study contributes theoretical and empirical advances on three dimensions: a prospect theory model of agricultural technology adoption with endogenous reference point formation calibrated to Nigerian farming context; a series of incentive-compatible field experiments with 600 farmers in Ogun, Kaduna, and Rivers States measuring loss aversion parameters, risk preferences, and social norm influences; and a randomised evaluation of extension message framing effects on adoption. The experiment tests whether gain-framed versus loss-framed technology messages produce different adoption outcomes, consistent with prospect theory predictions. Findings reveal loss aversion coefficients in the range of 2.2 to 2.8, significantly above standard expected utility assumptions, and strong susceptibility to peer norm information in adoption decisions. Loss-framed extension messages outperform gain-framed messages in increasing adoption for risk-reducing technologies. The study contributes an original behavioural adoption model and recommends behavioural extension design principles for Nigerian agricultural programmes.

Keywords: behavioural economics, technology adoption, prospect theory, loss aversion, agricultural extension.