Authors: Natalie Xiaoqi Liu, Boxiao Wu, Helen X. H. Bao, Jie Liu, Lei Feng
Year: 2026
Status: Under Review
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Abstract
Purpose: The paper aims to clarify the decision-making mechanisms behind voluntary and compensated rural homestead withdrawal in China. Grounded in Prospect Theory, the study constructs a specific value function model to examine how endowment characteristics and institutional factors shape farmers’ preferences regarding homestead retention versus exit modes. Design/methodology/approach: The study employs a quantitative research design using empirical data from the 2021 “Thousand Students, Hundred Villages” survey. Methodologically, it applies a value function model derived from Prospect Theory to analyze the trade-offs between gains and losses. The analysis evaluates a wide range of variables, including homestead property values, geographical location, social security functions, formal institutional factors, and subjective belief factors. Findings: Findings reveal that high housing market value and location in urban-rural fringe areas significantly promote withdrawal, especially temporary modes. Conversely, heavy reliance on the production and security functions of homesteads suppresses exit, as the rural social security system remains an insufficient substitute. While formal institutions and positive beliefs encourage withdrawal, emotional attachment acts as a significant psychological barrier. Furthermore, the study identifies a moderating effect where withdrawal policies amplify the influence of property value on exit behavior. Institutional factors are shown to be essential for overcoming the “status quo bias” inherent in farmers’ decisions. Originality/value: By balancing the interests of farmers and the government, the study offers a nuanced perspective on how “soft” factors like policy awareness and “hard” factors like market value interact to determine land use efficiency and social stability in rural China.