Understanding economic decision-making under social norms prescribing behaviours

Our dissertation provides behavioural economics literature with new theorizations of how social context matters a great deal in decision-making and the decision-making process itself, especially in regions where agents display human limitations and complications. The first chapter develops a theory of female empowerment through access to business loans in an environment where informality is the only affordable venue for operating a business venture. In Sub-Saharan Africa, many social institutions arise either from lack of access to formal insurance mechanisms or from the imperfection of financial markets. One such institution is the traditional sharing obligation whereby individuals must spread their wealth around. In chapter 2, we show that integrating such institutions into the standard neo-Boserupian framework can improve our understanding of the causes of poor agricultural performances in Sub-Saharan Africa. In chapter three, our thesis also contributes to the literature on returns to education in Africa by using the 2001 Cameroon household survey to estimate private rates of returns to education.In the second chapter, we develop a game-theoretic model of fertilizers use to explain poor agricultural outcomes in Sub-Saharan Africa (hereafter referred to as SSA). In our model, agents are smallholder farmers who must build up their savings so as to finance the purchase of a recommended level of fertilizers. To build up their savings, farmers in our model must draw on the proceeds from the previous harvesting season. However, a smallholder acting in autarky may find it hard to commit to saving for the next growing season (some four to six months away), if enough other farmers do not follow suit, because of traditional sharing obligations that put pressure on innovation-minded individuals to part with their assets in an unproductive manner. A farmer who anticipates this may renege on her commitment to save, and instead partake in the tradition to share his income with others. The more there are other farmers who break away from this tradition by firmly committing to saving, the higher the likelihood that a farmer who saves in autarky will be able to protect her savings from social predation. Consequently, a farmer's decision to save raises other farmers' marginal gain from saving. We show that the non-cooperative game these farmers play admits two pure-strategy Nash-equilibria.Much emphasis is placed on the need to increase the level of human capital through improved education access, to sustain high economic growth in Africa. This emphasis has given rise to renewed interest in obtaining estimates of private rates of returns to education (RORE) in Africa so as to understand the motivations and constraints which individuals face in their education cost-benefit analysis and thus be in a position to inform policy makers. While there is a large empirical literature on analysis of rates of returns to education, until recently, most analysis for Africa relied on non-representative surveys. As a result, their findings cannot be generalized to the whole population. The third chapter addresses that issue and contributes to the literature on returns to education in Africa by using the 2001 Cameroon household survey to estimate RORE. We compare RORE for those who attended an education cycle with those who have graduated from that education cycle. We also allow individuals to be endogenously selected into the informal sector, the formal private sector or in the public sector. (Abstract shortened by UMI.)In a more precise presentation, chapter one uses the non-cooperative game theory to highlight coordination failure that hinders the emergence of networks of female entrepreneurs necessary to overcome patriarchal business practices that limit female entrepreneurs' access to high-productivity informal activities. In our model, women's entrepreneurship is assisted by microfinance institutions (MFIs) which provide ban and training to all their clients. We focus on women's demand for venture capital and choice of activity as jointly determined by their ability to mitigate the transaction costs that limit their access to more productive business activities. In our framework, a female entrepreneur must jointly choose the type of business activity she plans to operate informally and its size as determined by the amount of capital borrowed from the MFI of her choice. Operating a high-productivity informal activity puts a higher demand on a woman to link up with other women operating the same type of activity in order to generate collective resources necessary to overcome obstacles created by patriarchal business practices. The more there are female entrepreneurs operating in such a network, the more able will this network be in enhancing women's success at operating high-productivity activities. Consequently, an essential feature of the environment underlying women's entrepreneurship in the informal economy is the complementarity of their respective business strategies.