Tailored production contracts boost farmer profits by understanding individual preferences.
The study looks at how to design contracts that motivate workers to do their best, even when they can't be closely monitored. By analyzing data from pig farmers, the researchers found that different farmers have different levels of risk aversion and effort costs. This affects how the boss assigns tasks and resources to each farmer. The study shows that farmers who are more afraid of risks have fewer options outside of their current job, so they are willing to work harder for less pay.