From Spectators to Co‐Managers: Understanding Smallholder Farmers' Climate Adaptation Through Bounded Rationality and Institutional Logics

ABSTRACT Smallholder farmers in the Guinea Savannah region of Ghana face multiple climate stressors, including droughts and floods. Farmers navigate these climate stressors by making adaptation decisions based on limited information, cognitive constraints, and time pressures, circumstances that reflect bounded rationality. The study moves beyond traditional “rational choice” models to explain how farmers make “satisficing,” practical, and context‐specific decisions based on limited information, cognitive constraints, and time pressures, and the role of institutional logics in shaping farmers' adaptation choices. The empirical analysis draws on a phenomenological qualitative design and semi‐structured interviews with 36 farmers across nine farming communities in three districts within Ghana's Guinea Savannah zone. The findings suggest that farmers draw on local awareness, ecological memory, and indigenous knowledge to manage climate stressors. In managing climate stressors, farmers make boundedly rational adaptation decisions through procedural rationality, heuristics, and ecological rationality. Such decisions are mediated by institutional logics, specifically the logics of appropriateness, consequentiality, and meaningfulness, which can either marginalize farmers to become spectators or empower them to become “co‐managers” of environmental change. The paper argues that climate policy design should incorporate the realism of psychological regularities to enhance adaptation governance. Doing so will strengthen adaptation governance by reinforcing state capacities to recognize, legitimize, and promote locally relevant knowledge and adaptation strategies. This perspective offers a more realistic and empowering approach to adaptation co‐management, particularly in vulnerable agricultural communities.