Behavioural Economics and Agriculture: an inquiry on cognitive biases in fruit growers’ decision-making

Since its origins, the field of behavioural economics has explored many aspects of human beings’ decision-making. Among these, particular attention has always been given to entrepreneurs and their exposure to cognitive biases, meaning systemic errors in taking decisions. As reported in literature, these biases do have a negative impact on firms’ financial performance, especially when it comes to small businesses. This thesis’ objective is to expand the current knowledge about SMEs entrepreneurs’ rationality when making strategic decisions. Specifically, three cognitive biases have been discussed and investigated: overconfidence, the planning fallacy, and the status quo bias. The study developed around a questionnaire mainly based on Likert scale questions, assessing the presence and the intensity of such biases in the population of fruit growers in Piedmont, Italy, with a numeric score between 1 and 5. Moreover, this thesis also aimed to find statistically significant relationships between bias scores and four demographic variables: gender, age, educational level, and business size. Results showed that fruit growers are affected by overconfidence and planning fallacy, whereas they do not seem to suffer of status quo bias, appearing open to change. Furthermore, some significant relationships have been found between the three biases and the demographic variables: business of 41-80 hectares, considered as medium-large, resulted to be both more overconfident and less subjected to the status quo bias than micro businesses. In addition, education proved to have a positive impact on the planning fallacy, as university graduates resulted less biases in planning issues. As a result, despite cognitive biases remain difficult to eradicate, this work provides some applications for fruit growers to try to reduce the impact of these traps on their businesses.