A behavior analysis of brazilian farmers based on sunk cost effects and prospect theory
DOI:
https://doi.org/10.32358/rpd.2020.v6.473Keywords:
escalation of commitment, sunk cost, farmers, prospect theory, food wasteAbstract
Purpose: identify whether the sunk cost effect is one of the reasons that make banana producers in Espírito Santo, a Brazilian state, make decisions that involve returning home with unsold production. Methodology/Approach: It is an exploratory and descriptive study of multiple cases. The object of study was 17 banana producers from Espírito Santo, who sell their products in Supply Centers of Espírito Santo (CEASA). Data collection was carried out through interviews. Findings: The results found demonstrate that producers are reluctant to sell below cost price, noting that there is an influence of sunk costs in their decisions. Another finding is that the fear of loss, which is one of the pillars of the Prospect Theory, also influences the decisions of producers, in the sense of trying to avoid future losses. Research Limitation: the methodology used does not allow inferences about the behavior of all producers. Originality/Value of paper: This study confirms that knowledge of costs in the decision-making process is fundamental in any business, since if producers were not influenced by the sunk cost effect, they would probably have better results in this activity.Downloads
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