Ford’s Obsession to Rubber An Empirical Study about Irrational Decision Making

In the middle of the 1920s Henry Ford made an investment decision seeming rather rational at that time. He wanted to be the first man owning a large scale rubber plantation in the Western hemisphere giving him self-sufficient access to the rubber necessary to produce tires for his cars. Thus he financed an experiment in the Amazon jungle. Within a short period however, market conditions had changed dramatically and the on-site-situation in Brazil was all but satisfying. Nevertheless he carried on for more than a decade without any recognisable repayment on his investment. Even the shortage of rubber during World War II did not help the plantation. Finally, the project was not given up before December 1945, when all circumstances had changed dramatically. Hence, although rather unusual in that way, the paper may be considered as a contribution to experimental economics as well as behavioural economics, because it is about an (agricultural) experiment as well as about the behaviour of a industrial tycoon