Speaker
Description
This study evaluates whether signaling theory can be used to promote the adoption of new technologies. We assume that observable adoption choices of new technologies send a signal about entrepreneurial ability and innovativeness—which are unobservable traits. We design and implement a cluster-randomized controlled trial involving 1,120 farmers in 140 Ugandan villages and the incentivized adoption of an integrated pest management (IPM) package. In the experiment we vary two dimensions: the visibility of the signal that farmers receive upon adoption of the package and the size of the package (or the cost of adoption). We find that introducing signaling incentives increases the adoption rate by 16 percentage points if the cost of adoption is low, but not when the cost is high. We provide descriptive evidence about farmers’ underlying beliefs, and develop a theoretical framework that accommodates the insight that the reputational gains from signaling may be non-monotonic. Unlike standard signaling models, we propose that reputation effects are unlikely to monotonically increase with signal strength. Instead, high cost adoption may be interpreted as a signal of excessive risk-taking or recklessness, which may damage one’s reputation and discourage adoption.
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