Adapting to climate change accounting for individual beliefs
利用孟加拉国农户数据和气象干旱指标，研究个体干旱信念的准确性如何影响灌溉决策，发现信念不准确会导致技术采用率降低和货币损失增加。
As the climate changes, efficient climate policy requires a better understanding of how individuals adapt. Despite extensive research on various climate adaptation frictions, including financial and technological constraints, models of adaptive decision-making assume that agents have perfect information and accurate beliefs about climate. Combining rural household data in Bangladesh with a meteorological measure of dryness, this paper studies the role of individual drought beliefs and their accuracy in irrigation decisions as a key adaptive margin. In a theoretical model, I introduce a behavioral friction to document how heterogeneous beliefs differentially influence responsiveness to the same meteorological signal in dryness. The empirical analysis reveals an asymmetric response to dry shocks in irrigation conditional on the accuracy of prior beliefs. A counterfactual analysis shows lower technology adoption levels and higher monetary losses when beliefs are inaccurate.