This advisory report describes the results and recommendations for Indian dairy farmers and Dutch and Indian companies, from the RAAK Family Dairy Tech India project. Researchers and students of two Dutch and one Indian University of Applied Sciences, together with ten Dutch companies, Indian companies and eight innovative farmers in Pune district collaborated to develop robust and affordable technologies and knowledge for Indian medium sized dairy farmers, in Pune district, Maharashtra. The report also describes innovations in the farmers’ business models and value chains.
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PurposeIn order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and medium-sized enterprises (SMEs) and what influences the shaping of these heuristics. In doing so, the authors detect possible fast-and-frugal heuristics in day-to-day decision-making of independent financial advisers who help owners of SMEs to acquire capital (e.g. loans, factoring, leasing and equity).Design/methodology/approachThe authors inductively assessed the work of financial advisers of SMEs. Based on group discussions, the authors drew up a semi-structured interview-protocol with descriptive questions about how financial advisers come to a deal for their clients. The interviews of 19 professionals were analysed by relating them to the theory of fast-and-frugal heuristics.FindingsWithin their decision-making, advisers estimate the likelihood of acceptance by a few financial providers they know well in their personal network with a strong bias towards traditional banking products, although there are a large number of alternatives on the Dutch market. “Less is more” seems to be a relevant principle when defined as satisficing. Heuristics help advisers to deal with behavioural and economic limitations. Also, the authors have found that client interaction, previous working experience and the company the adviser is working for influences the shaping of the simple rules the adviser is using.Research limitations/implicationsThe study shows how difficult it is to understand the ecological rationality of a certain group of professionals and to understand the “less is more” principle. Financial advisers to SMEs use cognitive shortcuts and simple rules to advise SME-owners, based on previous experiences, but it is difficult to determine whether that leads to the same or even better solutions for them and their clients than using probability theory and financial optimisation models. Within heuristics, satisficing seems to be a dominant mechanism. Here, heuristics help advisers in recognising possibilities by searching for similarities between a current financing case and previous experiences. The data suggests that if “less is more” is defined as satisficing for one or more stakeholders involved, the principle dominates the decision making of financial advisers of SME's.Practical implicationsThe authors suggest the relevance of a behavioural approach to finance by assessing the day-to-day decisions of financial advisers of SMEs. Also, the authors suggest that financial advisers are guided by previous experiences, and they do not fully assess a wide range of options in their work but need shortcuts to fulfil the needs of their clients.Originality/valueThe study comes close to day-to-day decision-making in finance by assessing how professionals make decisions. The authors try to understand types of heuristics in relation with “ecological rationality” and the less is more principle. The authors assess financial advisers of SME-companies, a group that has gotten little research attention until now. The influence of client interaction and of the company the adviser is working for is remarkable in the shaping of the advisers' simple rules.
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In Eastern Africa, increasing climate variability and changing socioeconomic conditions are exacerbating the frequency and intensity of drought disasters. Droughts pose a severe threat to food security in this region, which is characterized by a large dependency on smallholder rain-fed agriculture and a low level of technological development in the food production systems. Future drought risk will be determined by the adaptation choices made by farmers, yet few drought risk models … incorporate adaptive behavior in the estimation of drought risk. Here, we present an innovative dynamic drought risk adaptation model, ADOPT, to evaluate the factors that influence adaptation decisions and the subsequent adoption of measures, and how this affects drought risk for agricultural production. ADOPT combines socio-hydrological and agent-based modeling approaches by coupling the FAO crop model AquacropOS with a behavioral model capable of simulating different adaptive behavioral theories. In this paper, we compare the protection motivation theory, which describes bounded rationality, with a business-as-usual and an economic rational adaptive behavior. The inclusion of these scenarios serves to evaluate and compare the effect of different assumptions about adaptive behavior on the evolution of drought risk over time. Applied to a semi-arid case in Kenya, ADOPT is parameterized using field data collected from 250 households in the Kitui region and discussions with local decision-makers. The results show that estimations of drought risk and the need for emergency food aid can be improved using an agent-based approach: we show that ignoring individual household characteristics leads to an underestimation of food-aid needs. Moreover, we show that the bounded rational scenario is better able to reflect historic food security, poverty levels, and crop yields. Thus, we demonstrate that the reality of complex human adaptation decisions can best be described assuming bounded rational adaptive behavior; furthermore, an agent-based approach and the choice of adaptation theory matter when quantifying risk and estimating emergency aid needs.
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