Farm Households Production Theories: a Review of 'institutional' and 'behavioural' Responses Mariapia Mendola Farm Households Production Theories: a Review of 'institutional' and 'behavioural' Responses*

This paper presents a synthesis of the main theoretical and empirical contributions that analyse production choices of farm households living and operating in developing countries. The review is particularly concerned with recent micro-economic contributions that highlight the trade-off farm households typically face, between full-income risk and expected return, while making production decisions in a context of weak financial institutions in low-income settings. The same literature point out how weak institutions and farm households behavioural responses to risk-return trade-off may lead to situations of ‘poverty traps’. JEL classification: D13; Q12 ; O13.