This paper examines the impact of relaxing credit and risk constraints on agricultural investment decisions in Ghana. The authors conducted experiments in northern Ghana, where farmers were randomly assigned to receive cash grants, grants for purchasing rainfall index insurance, or a combination of both. The results show that demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices. The primary constraint to farmer investment is uninsured risk, as when provided with insurance against primary catastrophic risks, farmers increase their expenditure on farms. Demand for insurance increases with the receipt of payouts by the farmer and others in their social network, indicating awareness of basis risk and imperfect trust in insurance payouts. The study also explores the demand for index insurance at different prices and the effects of social interactions on insurance demand. The findings suggest that addressing financial constraints and providing insurance can significantly enhance agricultural investment and productivity in developing countries.This paper examines the impact of relaxing credit and risk constraints on agricultural investment decisions in Ghana. The authors conducted experiments in northern Ghana, where farmers were randomly assigned to receive cash grants, grants for purchasing rainfall index insurance, or a combination of both. The results show that demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices. The primary constraint to farmer investment is uninsured risk, as when provided with insurance against primary catastrophic risks, farmers increase their expenditure on farms. Demand for insurance increases with the receipt of payouts by the farmer and others in their social network, indicating awareness of basis risk and imperfect trust in insurance payouts. The study also explores the demand for index insurance at different prices and the effects of social interactions on insurance demand. The findings suggest that addressing financial constraints and providing insurance can significantly enhance agricultural investment and productivity in developing countries.