on the fixed nature of sharecropping contracts newbery and stiglitz i979 suggest four stylised facts of sharecropping which theories should attempt to explain the first is the persistence of sharecropping and its coexistence with fixed rental and wage markets under a variety of conditions over centuries of time the second is that in modern developed economies there appears to be a decline in share tenancy thirdly share tenancy is often but not alwavs associated with lower productivity than fixed rental land finally in many economies contracts involve shares of around one half for landlord and tenant this does not vary from contract to contract and does not seem to be the object of negotiation smith i776 and many subsequent authors have likened sharecropping to a tax they argue that under this type of contract tenants choose their labour supply to equate their marginal disutility of labour with their proportionate share of the marginal product instead of the full marginal product they therefore regard sharecropping as an inefficient form of land tenure however this view is difficult to reconcile with the first observation given the coexistence of fixed rent and share contracts it is reasonable to expect that if share contracts were relatively inefficient they would quickly die out this does not appear to have happened more recently it has been argued most notably by cheung i969 that if there is certainty and transactions costs are the same for all contracts then provided a share contract specifies the labour supply of the tenant it leads to the same efficient allocation of resources as a fixed rent or wage contract cheung has used this result as the basis of an explanation for coexistence he suggests that the transaction costs for share contracts are higher than for wage and fixed rent contracts however share contracts have the advantage that they allow the risk to be shared between the landlord and tenant whereas with fixed rent contracts the tenant bears all the risk and with wage contracts the landlord does given varying degrees of risk aversion among landlords and tenants it is possible that for some parties the risk sharing advantages outweigh the transaction cost disadvantages so that they will prefer share contracts whereas with others the reverse is true one problem with this argument raised by stiglitz i974 and newbery i977 is that given constant returns to scale the risk sharing properties of share contracts can be attained with mixtures of fixed rent and wage contracts if these do indeed have lower transaction costs share contracts would not then be observed

limited liability moral hazard and share tenancy abstract this paper contributes to the literature on share tenancy by reexamining a framework developed in basu 1992 it is shown that limited liability and moral hazard in effort provides a richer theory of share contracts when the tenant also has discretion in the choice of projects

the role of consumption credit in agricultural tenancy abstract in traditional agriculture it is common practice for landlords to give consumption loans to their own tenants if the tenant derives all his income from the landlord it is puzzling that the landlors needs another means of expropriating the surplus he could just raise the rent the paper suggests that consumption credit may be a side payment designed to enable the landlord to absorb the tenant s risk due to weather uncertainty without weakening his incentive to work tenancy is modelled as an agency contract designed in terms of information may be available to the landlord

a framework for the analysis of evolving patron client ties in agrarian economies abstract this paper looks systematically at the various factors that can account for the disappearance or the transformation of the institution of patronage that used to structure labor and other relationships in many agrarian societies of the past it is an attempt to offer a unifying framework capable of guiding one s attention to the relevant variables and to the way they interact in this process the rather simplistic view according to which there is a unique linear path through which patronage evolves is called into question and a number of different scenarios are instead presented these alternatives are illustrated with reference to asia

when are voluntary pensions indifferent abstract the mandatory pension pillar is usually supplemented by a voluntary one in our simple model voluntary pensions partly replace mandatory ones without affecting the outcomes the voluntary pensions are indifferent this result may serve as benchmark

a theory of sharecropping the role of price behavior and imperfect competition this paper proposes a theory of sharecropping on the basis of price behavior in agriculture and imperfectly competitive nature of rural product markets we consider a contractual setting between one landlord and one tenant with seasonal variation of price where the tenant receives a low price for his output while the landlord can sell his output at a higher price by incurring a cost of storage we consider two different classes of contracts i tenancy contracts and ii crop buying contracts it is shown that sharecropping is the optimal form within tenancy contracts and it also dominates crop buying contracts provided the price variation is not too large then we consider interlinked contracts that have both tenancy and crop buying elements and show that there are multiple optimal interlinked contracts finally proposing an equilibrium refinement that incorporates imperfect competition in the rural product market it is shown that the unique contract that is robust to this refinement results in sharecropping

limited liability and the existence of share tenancy abstract the paper considers the problem confronting an absentee landlord who can lease out his land on a fixed rent contract share rent contract or a mixture of the two it is argued that in poor areas it is natural to have each contract underwritten by an implicit limited liability clause which allows a person to forego paying rent under extreme crop failures in the presence of such an implicit clause a certain tension appears between a tenant and a landlord with the former preferring risky projects and the latter preferring safe ones it is shown that in such a case share tenancy turns out to be the dominant system from among the class mentioned above because it minimises the tension between the landlord and the tenant the result is then used to discuss conditions under which share tenancy will tend to wither away

capital requirements screening and interlinked sharecropping and credit contracts this paper provides one more rationale for interlinking credit and tenancy contracts in the context of production loans in an environment characterized by a heterogeneous labor pool and imperfect information landlords will have an incentive to avail themselves of screening devices by linking tenancy and credit contracts a screening device can be implemented the equilibrium set of contracts is characterized by a variety of interest rates some of which might be below the market interest rate the interest rate principal schedule is downward sloping with higher ability tenants choosing larger principals at lower interest rates

share tenancy as strategic delegation abstract the paper develops a new explanation of sharecropping based on the idea of an incentive equilibrium it considers a set up in which a few landlords in a village confront the choice of cultivating their farms by adopting different tenurial arrangements ranging from owner operation through the fixed rental system to sharecropping these landlords are the only sources of employment in the village and compete in the wages they pay to their workers in such an environment sharecropping is explained as a form of strategic delegation where a landlord gets extra benefit by having a share tenant and giving him suitable incentives

moral hazard and peer monitoring in a laboratory microfinance experiment abstract this paper reports the results from a laboratory microfinance experiment of group lending in the presence of moral hazard and costly peer monitoring we compare peer monitoring treatments in which credit is provided to members of the group to individual lending treatments with lender monitoring we find that if the cost of peer monitoring is lower than the cost of lender monitoring peer monitoring results in higher loan frequencies higher monitoring and higher repayment rates compared to lender monitoring in the absence of monitoring cost differences however lending monitoring and repayment behavior is mostly similar across group and individual lending schemes within group lending contrary to theoretical predictions simultaneous and sequential lending rules provide equivalent empirical performance

endogenous matching and the empirical determinants of contract form empirical work on contracts typically regresses contract choice on observed principal and agent characteristics if i some of these characteristics are unobserved or partially observed and ii there are incentives whereby particular types of agents end up contracting with particular types of principals estimated coefficients on the observed characteristics may be misleading we address this endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early renaissance tuscany controlling for endogenous matching has an impact on parameters of interest and tenants risk aversion appears to have influenced contract choice

the long and short of it why are stocks with shorter runs preferred this article examines how consumers process graphical financial information to estimate risk we propose that consumers sample the local maxima and minima of a graph to infer the variation around a trend line which is used to estimate risk the local maxima and minima are more extreme the higher the run length of the stocks the consecutive number of upward or downward movements of a price series with identical mean variance skewness and kurtosis three experiments show that this leads to stocks with higher run lengths being perceived as riskier the run length effect importantly the run length effect is greater for investors who are more educated are employed full time trade more frequently have had longer experience trading and trade a wider range of financial instruments implications for the communication of financial products public policy and consumer welfare are discussed as are theoretical implications for the processing of visual and financial information and behavioral finance

impacts of tenancy arrangements on investment and efficiency evidence from pakistan in this article we use farm level data from the punjab province in pakistan to analyze the impact of three tenancy contracts on investment in soil improving and productivity enhancing measures and farm productivity a multivariate tobit model that accounts for potential substitutability and complementarity of investment options as well as endogeneity of tenure arrangements was employed in the empirical analysis our empirical results indicate that land tenure arrangements influence farmers decisions to invest in soil improving and productivity enhancing measures in particular owner cultivators with secured tenancy arrangements were found to be more likely to invest in soil improving and productivity enhancing measures compared to those on leased contracts we also find that output per hectare was highest on land cultivated by owners and lowest on land under sharecropping tenancy lending support to the marshallian inefficiency hypothesis

contract duration and investment incentives evidence from land tenancy agreements this paper analyzes the empirical determinants of contract length a key and yet neglected dimension of contractual structure i estimate contract length and contract type jointly using original data on tenancy agreements signed between 1870 and 1880 in the district of siracusa italy the findings indicate that the choice of contract length is driven by the need to provide incentives for nonobservable investment taking into account transaction costs and imperfections in the credit markets that make incentive provision costly the results also illustrate that because both length and the compensation scheme are used to provide incentives within the same contract joint analysis is important for a correct interpretation of the evidence jel d82 o12 q15

does sharecropping affect long term investment evidence from west bengal s tenancy reforms in india land reform has been high on the political agenda since independence in 1947 and early efforts at abolishing intermediaries are widely credited with having brought about significant social benefits the most prominent type is tenancy reform as it does not extinguish landlords ownership rights tenants who may have benefited from rent ceilings and cannot be evicted still have to pay annual share rent this weakness of rights may fail to create the incentives for effort supply and long term investment that have underpinned the success of land reforms elsewhere effectively adding a dynamic inefficiency to the disincentives created by the marshallian inefficiency of sharecropping this could imply that despite the high political price of implementing land reform in india the schemes so far have failed to reach their productivity and poverty reduction potential

contract choice in agriculture with joint moral hazard in effort and risk we analyze optimal contract choice in agriculture when there is joint moral hazard on the part of the farmer in the supply of effort and the riskiness of the technique of cultivation in the presence of limited liability high powered incentive contracts such as fixed rental contracts will induce the farmer to adopt techniques of cultivation that are too risky from the point of view of the landlord on the other hand low powered incentive contracts such as fixed wage contracts will induce the farmer to supply too little effort we show that sharecropping contracts emerge as a natural solution to balance these two conflicting considerations

efficient share tenancy contracts under risk the case of two rice growing villages in thailand abstract two categories of thai sharecroppers are observed to be efficient those under high poverty and high risk and those in a long term relation of gift exchange with their landlord econometric estimates show that use of variable factors by these sharecroppers is insignificantly different from that by owner operators and significantly higher than that by generic sharecroppers interpretations for this behavior are provided by models of sharecropping under safety first and of repeated contracts with gift exchange

limited liability wealth differences and tenancy contracts in agrarian economies abstract an explanation is provided for two observations concerning variations in the choice of tenants and their welfare differences in tenants wealth imply corresponding differences in liability when default is possible on fixed rental commitments in this context the inability of landlords to specify their tenants effort lead to effort choices that vary with the type of contract offered the selection of tenants and the contract terms they receive thus depend on wealth with wealthier tenants being preferred and receiving fixed rent contracts these results also predict that wealthier tenants earn higher profits on their leased plots

uncertainty entrepreneurship and sharecropping in india this study attempts to explain the coexistence of different farm lease arrangements in terms of the varying significance of entrepreneurial functions in india crop sharing arrangements are common in areas of relative economic certainty with very little scope for decision making for example for product and factor substitution and where the entrepreneurial profit is low fixed cash rents are common in situations of high uncertainty where the scope for decision making is significant or where the crops are highly profitable efficiency considerations predominate in areas of sharecropping favoring a smaller farm size whereas under high uncertainty large size is favored for reducing risk

an inquiry into quasi credit contracts the role of reciprocal credit and interlinked deals in small scale fishing communities in agrarian village societies beset with many hazards and uncertainties people evolve various means of coping with risk what is perhaps less known is that credit transactions can sometimes serve the function of reducing risk in such societies this article is concerned with examining several insurance motivated credit arrangements in small scale fishing communities a hunger insurance mechanism of reciprocal credit and a system of interlinked contracts aimed at insuring against risks in the spheres of labour and marketing relations will be extensively dealt with moreover the concept of triadic relationships will be shown to have special relevance in the case of traditional insurance arrangements aiming at controlling problems of moral hazard

intertemporal discounting and tenurial contracts a simple two period model without uncertainty and strategic complementarity in the labor market or asymmetric information of any kind is employed to study the nature of contracts signed between a landlord and a tenant in a rural economy the paper provides conditions under which different types of contracts may prevail q 2001 elsevier science b v all rights reserved

renegotiation proof tenurial contracts as screening mechanisms abstract this paper is motivated by the hypothesis that the nature of the tenurial contract is sensitive to the tenant s privately known level of farming skill in particular tenants with low skill levels work for wage contracts those with high skill levels work for rent contracts and tenants whose skill levels lie in between these extremes work for share contracts we study a principal agent type model both with and without the assumption that the parties can commit not to renegotiate the terms of the initially binding accepted contract if the parties can make such a commitment then our results do support this hypothesis on the other hand if the parties cannot make such a commitment then with some positive probability tenants of all skill levels work for the same wage or share contract however with the complement positive probability the hypothesis is vindicated in the no commitment case as well