Going beyond perfect rationality: drought risk, economic choices and the influence of social networks

Theoretical and experimental studies from psychological and behavioral sciences show that heuristics and social networks play an important role in decisionmaking under risk. The goal of this paper is to investigate the effects of empirical social networks and different behavioral rules on farmers’ irrigation adoption under drought risk and its impacts on several macroeconomic indicators such as the rate of adaptation, water demand and regional agricultural income.We present an application Electronic supplementary material The online version of this article (doi:10.1007/s00168-015-0699-4) contains supplementary material, which is available to authorized users. B Rianne van Duinen [email protected] Tatiana Filatova [email protected] Wander Jager [email protected] Anne van der Veen [email protected] 1 Department of Water Engineering and Management, University of Twente, Drienerlolaan 5, P.O. Box 217, 7500 AE Enschede, The Netherlands 2 Department of Economics, Scenarios and Innovation, Deltares, Daltonlaan 400, P.O. Box 85467, 3508 AL Utrecht, The Netherlands 3 Centre for Studies in Technology and Sustainable Development, University of Twente, Drienerlolaan 5, P.O. Box 217, 7500 AE Enschede, The Netherlands 4 Department of Social Sciences, University College Groningen, Groningen University, Nettelbosje 2, 9747 AE Groningen, The Netherlands 5 ITC, Department of Urban and Regional Planning and Geo-Information Management, University of Twente, Hengelosestraat 99, P.O. Box 217, 7500 AE Enschede, The Netherlands