Altruism, moral hazard, and sharecropping

DOI:10.17221/219/2015-AGRICECONCitation:Jiancai Pi (2016): Altruism, moral hazard, and sharecropping. Agric. Econ. – Czech, 62: 575-584.
download PDF

The paper provides a new explanation for the emergence of sharecropping in agriculture. Under the principal-agent moral hazard framework, the choice of the agrarian land lease contracts is discussed from the perspective of behavioural economics. The analyses show that the landlord and the tenant’s behaviour patterns play an important role during the course of the contractual choice. Specifically, the combination of altruism and moral hazard can lead to sharecropping, which gives an explanation greatly different from the existing theoretical literature.

References:
Agrawal P. (1999): Contractual structure in agriculture. Journal of Economic Behavior & Organization, 39: 293–325.
 
Allen Franklin (1982): On Share Contracts and Screening. The Bell Journal of Economics, 13, 541- doi:10.2307/3003473
 
Bardhan P. (1984): Land, Labor and Rural poverty: Essays in Development Economics. Columbia University Press, New York.
 
Basu Kaushik (1992): Limited liability and the existence of share tenancy. Journal of Development Economics, 38, 203-220 doi:10.1016/0304-3878(92)90026-6
 
Becker G.S. (1976): Altruism, egoism, and genetic fitness: economics and sociobiology. Journal of Economic Literature, 14: 817–826.
 
Braverman A., Stiglitz J.E. (1982): Sharecropping and the interlinking of agrarian markets. American Economic Review, 72: 695–715.
 
Byres T.J. (1983): Sharecropping and Sharecroppers. Frank Cass, London.
 
Cheung S.N.S. (1968): Private property rights and sharecropping. Journal of Political Economy, 76: 107–122.
 
Cheung S.N.S. (1969a): The Theory of Share Tenancy. University of Chicago Press Chicago.
 
Cheung S.N.S. (1969b): Transaction costs, risk aversion, and the choice of contractual arrangements. Journal of Law and Economics, 12: 23–43.
 
Dubois Pierre (2002): Moral hazard, land fertility and sharecropping in a rural area of the Philippines. Journal of Development Economics, 68, 35-64 doi:10.1016/S0304-3878(02)00005-6
 
Eswaran M., Kotwal A. (1985): A theory of contractual structure in agriculture. American Economic Review, 75: 352–367.
 
Jr. Martin A. Garrett, Xu Zhenhui (2003): The Efficiency of Sharecropping: Evidence from the Postbellum South. Southern Economic Journal, 69, 578- doi:10.2307/1061695
 
Gaube Thomas (2006): Altruism and charitable giving in a fully replicated economy. Journal of Public Economics, 90, 1649-1667 doi:10.1016/j.jpubeco.2005.10.003
 
Ghatak Maitreesh, Pandey Priyanka (2000): Contract choice in agriculture with joint moral hazard in effort and risk. Journal of Development Economics, 63, 303-326 doi:10.1016/S0304-3878(00)00116-4
 
Hallagan William (1978): Self-Selection by Contractual Choice and the Theory of Sharecropping. The Bell Journal of Economics, 9, 344- doi:10.2307/3003586
 
Harsanyi J.C. (1986): Rational Behaviour and Bargaining Equilibrium in Games and Social Situations. Cambridge University Press, Cambridge.
 
Itoh Hideshi (2004): Moral Hazard and Other-Regarding Preferences. The Japanese Economic Review, 55, 18-45 doi:10.1111/j.1468-5876.2004.00273.x
 
Khalil E.L. (2004): What is altruism? Journal of Economic Psychology, 25: 97–123.
 
Laffont J.-J., Martimort D. (2002): The Theory of Incentives. Princeton University Press, New Jersey.
 
Laffont Jean-Jacques, Matoussi Mohamed Salah (1995): Moral Hazard, Financial Constraints and Sharecropping in El Oulja. The Review of Economic Studies, 62, 381- doi:10.2307/2298034
 
Marshall A. (1920): Principles of Economics. Macmillan & Co., Limited, London (Reprint Edition: 1961).
 
Otsuka K., Chuma H., Hayami Y. (1992): Land and labor contracts in agrarian economies: theories and facts. Journal of Economic Literature, 30: 1965–2018.
 
Pi Jiancai (): Fairness and Incentives in Relation-Based Societies. Economic Research-Ekonomska Istraživanja, 24, 15-25 doi:10.1080/1331677X.2011.11517452
 
Pi J. (2012): The choice of multi-task delegation modes in relation-based societies. Economic Computation and Economic Cybernetics Studies and Research, 46: 169–181.
 
Pi J. (2013a): A new solution to the puzzle of fifty-fifty split in sharecropping. Ekonomska Istrazivanja – Economic Research, 26: 141–152.
 
Pi J. (2013b): An organizational economics approach to the existence of sharecropping. Agricultural Economics – Czech, 59: 537–541.
 
Ray Tridip (1999): Share tenancy as strategic delegation. Journal of Development Economics, 58, 45-60 doi:10.1016/S0304-3878(98)00102-3
 
Ray Tridip, Singh Nirvikar (2001): Limited liability, contractual choice, and the tenancy ladder. Journal of Development Economics, 66, 289-303 doi:10.1016/S0304-3878(01)00163-8
 
Sadoulet Elisabeth, de Janvry Alain, Fukui Seiichi (1997): The Meaning of Kinship in Sharecropping Contracts. American Journal of Agricultural Economics, 79, 394- doi:10.2307/1244138
 
Sen A. (1985): Goals, commitment, and identity. Journal of Law, Economics & Organization, 1: 341–355.
 
Sengupta Kunal (1997): Limited liability, moral hazard and share tenancy. Journal of Development Economics, 52, 393-407 doi:10.1016/S0304-3878(96)00444-0
 
Simon H.A. (1993): Altruism and economics. American Economic Review, 83: 156–161.
 
Stiglitz Joseph E. (1974): Incentives and Risk Sharing in Sharecropping. The Review of Economic Studies, 41, 219- doi:10.2307/2296714
 
von der Pol T., Weikard H.-P., van Ierland E. (2012): Can altruism stabilise international climate agreements? Ecological Economics, 81: 112–120.
 
Walker Catherine (2004): A charitable view of altruism: Commentary on ‘What is altruism?’ by Elias Khalil. Journal of Economic Psychology, 25, 129-134 doi:10.1016/S0167-4870(03)00078-3
 
download PDF

© 2017 Czech Academy of Agricultural Sciences