Cardinal Utility Functions and Managerial Behavior

Halter, A. N.; Beringer, Christoph

doi:10.2307/1235326

Cited by 14 publications

(7 citation statements)

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“…Since the use of this model to derive utilities has been described by von Neumann and Morgenstern [27], and in a field study by Halter and Beringer [12], we do not propose to give details of the model here. It is also the method usually prescribed by texts on decision making.…”

Section: Von Neumann-morgenstern Modelmentioning

confidence: 99%

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Utility Analysis in a Practical Setting

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Halter

1968

American J Agri Economics

117

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An empirical study involving derivations of farmers' utility functions and the accuracy of these functions in predicting practical decisions is here reported. Three models of utility estimation which were used are compared as to their predictive accuracy and usefulness under field conditions. The study tests the hypothesis that maximizing expected utility, as a criterion of decision, is superior to maximizing expected monetary value. Utility functions are derived for two points in time in order to test the hypothesis that, if utility functions are to serve as a guide to the decision maker, they must be derived at each point in time at which decisions are made. Implications for decision-making research and for practical farm decision making are indicated. 0< We are indebted to John L. Dillon for helpful comments.

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Section: Von Neumann-morgenstern Modelmentioning

confidence: 99%

“…Agricultural economists have shown a continuing interest in utility analysis since the work of Halter and Beringer [12] and the Interstate Managerial Study [14]. P. Johnson [15] examined six empirical studies concerned with price expectations for their consistency with a hypothesis of risk preference among farmers.…”

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confidence: 99%

Utility Analysis in a Practical Setting

Officer

Halter

1968

American J Agri Economics

117

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“…Early empirical work upon farmers' attitudes to risk was concerned with the interpretation of answers to individual questions about uncertain prospects (Halter and Behringer, 1960). Johnson (1962) reported six studies which appeared to suggest that farmers held a preference for risk.…”

Section: Bemoullian Decision Theory*mentioning

confidence: 99%

The Analysis of Risky Farm Management Decisions: Advising Farmers About the Use of Pesticides*

Webster

1977

J Agricultural Economics

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This paper discusses the treatment of risk in farm management decisions and reports an analysis of aproblem which faces some wheat producers in their crop husbandry. The first two sections of the paper investigate measures of risk and emphasise the subjective nature of a decision under risk. Some of the concepts of Bernoullian decision theory are then briefly introduced. The remairling sections of the paper are devoted to a brief study which uses these concepts to analyse the problem of whether or not to spray against Septoria, a fungal disease of wheat. The probabilities of a response to spraying were obtained from a plant pathologist for a rarlge of diferent field observations. These were then used as the basis for utility-maximising recommendations for a sample of farmers' utility functions. It is tentatively comluded that for this particular decision the farmers' attitudes approximated to risk indifference. However, it is also suggested that the use of subjective probabilities of response to spraying could have a useful impact upon the provision of advice in these circumstances.

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“…Hence, the slope of an indifference curve, drawn in the N -V space, pertaining to the utility equation (7) and denoted by SeN) would be:…”

Section: A Muitiperiod Problemmentioning

confidence: 99%

“…S See footnote 2 7. For instance, when the resource endowment is a random variable-the expected value of which is subject to changes from one period to another-the investment contemplated above is comparable with the ones discussed in Hadley's presentation of sequential decision stochastic programming [6,.at New York University on June 22, 2015 http://ajae.oxfordjournals.org/ Downloaded from…”

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confidence: 98%

The Investment Behavior of a Farm Firm Operating under Risk

Sadan

1970

American J Agri Economics

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The opportunities facing the investment decision maker in a farm finn operating under risk can be summarized in some cases in terms of "efficiency frontiers," the dimensions of which are the expected present value and the variance of the farm's future net returns. This article attempts to trace and define these frontiers in terms of deductible algebraic equations in simplified single-and multiperiod cases where the farm output level is determined by a single systematic input variable-capital-and a single random factor and where the functional relationship is Cobb-Douglas. It also attempts to outline, through simulation procedures, the frontiers pertaining to a "real world" case of a growing fann cum household unit. and A = a constant.The firm's net income denoted as N is where R is a given rate of remuneration.For the sake of simplicity, it is assumed that the input x is a stock of real assets paid for at the beginning of the production period. The entire stock perishes as the output value materializes at the end of that period. The rate of interest per period, denoted r, is given; thus, where y~O=output level measured in value terms at a given output price; x~O=input level measured in value terms at given input price; s = a nonnegative random variable (reflecting, for example, weather conditions) with an expected value E(z) = 1 and known variance q2; a = production elasticity of x where 0

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Cardinal Utility Functions and Managerial Behavior

Cited by 14 publications

References 0 publications

Utility Analysis in a Practical Setting

Utility Analysis in a Practical Setting

The Analysis of Risky Farm Management Decisions: Advising Farmers About the Use of Pesticides*

The Investment Behavior of a Farm Firm Operating under Risk

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