Explain the persistence of sharecropping contracts

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Economists tend to ask two questions in a bilateral contracting situation: Is the outcome efficient? How are the gains, distributed? a. Suppose that landlords and tenants care only about the expected or average gain from the contract, and not about risk. Comparing a sharecropping contract to a fixed-rent contract: which of these is efficient? Explain. [4 points] b. Now, suppose that tenants lack assets and do not have access to insurance or credit markets. They are therefore in a poor position to bear risk. Can this help explain the persistence of sharecropping contracts? Explain.

Reference no: EM133063287

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