The common horse is really the worst shod?! – or some experiences of analysing machinery sharing arrangements in Hungary

Baranyai, Zsolt – Kovács, Zoltán – Vásáry, Miklós

Keywords: trust, cooperation, moral hazard, Sholtes-model, waymodel

Numerous experiences illustrate that the cooperation activity among farmers is rather low in Hungarian agriculture, although – by evaluating the current situation of the sector – it would be extremely necessary. In connection with this problem this paper analyses the impact of moral hazard in the machinery sharing arrangements of field crop farms. The research was made on the basis of the theoretical background provided by the new institutional economics, including mostly the agency theory and integrating the Sholtes approach of trust as well as by using statistical “waymodels”. The database of our research was a survey made among farmers in Békés county. The results of the empirical research confirm that the moral hazard exists in the partnership among farmers, which means that the farmers have some negative experiences concerning cooperation but its volume is relatively insignificant. We have shown by statistical analysis that the moral hazard negatively affects the cooperation activity. This effect can be divided into two parts: a direct and a traceable indirect impact, so the moral hazard can reduce the cooperation willingness of farmers by undermining trust, too. Our results have also underlined that the currently low cooperation activity is only slightly due to the existence of moral hazard, that is “the common horse is not necessarily the worst shod”! The empirical testing of Sholtes trust-model was made in the frames of complementary examinations. It was concluded that the theoretical model, which leads the trust back to the faith in the loyalty and competence of partners, is basically correct. That thesis was also confirmed according to which high-level trust is formed among partners if both the faith in loyalty and competence has high values. Our research, however, has revealed that the level of trust among partners is differently affected by the above mentioned two factors: it is statistically shown that the effect of faith in loyalty is stronger.

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