Abstract
To improve the provision of microcredit to farmers, this paper describes and suggests which cognitive biases in Behavioral Economics may apply to and should be tested on borrowers (farmers) and lenders (workers at Rural Credit Cooperatives) in China’s rural market for microcredit. For example, some of the biases considered are loss aversion, ambiguity aversion and the sequential bias. If biases are found, this paper also suggests what would help mitigate the biases’ negative effects. This paper is the first to apply Behavioral Economics to the lenders in China’s rural credit market.
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