Chapter 2 Uncertainty, risk aversion, and risk management for agricultural producers

Moschini, GianCarlo; Hennessy, David A.

doi:10.1016/s1574-0072(01)10005-8

Cited by 270 publications

(210 citation statements)

References 175 publications

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“…Expected utility theory is the most widely accepted normative model of rational choice (Meyer, 2000) that economists have used also as a descriptive model of decision making under risk (Thaler, 2000). Numerous studies have, however, criticised the expected utility hypothesis on descriptive grounds because it fails to describe observed behaviour (Kahneman and Tversky, 1979;Allais, 1984;Moschini andHennessy, 2001, Rabin andThaler, 2001). The best way to describe decisionmaking behaviour, according to Slovic et al (1982), March and Shapira (1987) and Priem et al (2002), is to understand the individual's frame of reference for evaluating choices with uncertain outcomes because the decision maker's perceptual world is that person's reality and forms the basis for her or his choices.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

“…119 The measures used to elicit farmers' risk preferences in all these studies, including ours, is a simple approximation. More advanced methods to elicit farmers' risk attitude is discussed in, e.g., Moschini and Hennessy (2001) and Hardaker et al (2004). Conventional dairy farmers generally perceived the extent to which they take risks to be less than that of others.…”

Section: Farmer's Willingness To Take Riskmentioning

confidence: 99%

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Comparing risk perceptions and risk management in organic and conventional dairy farming: empirical results from Norway

Flåten¹,

Lien²,

Koesling

et al. 2005

Livestock Production Science

190

167

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This study was conducted to explore organic and conventional dairy farmers' perceptions of risk and risk management, and to examine relationships between farm and farmer characteristics, risk perceptions, and strategies. The data originate from a survey of conventional (n = 363) and organic (n = 162) dairy farmers in Norway. Organic farmers had the least risk averse perceptions. Institutional and production risks were perceived as primary sources of risk, with farm support payments at the top. Compared to their conventional colleagues, organic farmers gave more weight to institutional factors related to their production systems. Conventional farmers were more concerned about costs of purchased inputs and animal welfare policy. Organic and conventional farmers' management responses were more similar than their risk perceptions. Financial measures such as liquidity and costs of production, disease prevention, and insurance were perceived as important ways to handle risk. Even though perceptions were highly farmer-specific, a number of socio-economic variables were found to be related to risk and risk management. The primary role of institutional risks implies that policy makers should be cautious about changing policy capriciously and they should consider the scope for strategic policy initiatives that give farmers some greater confidence about the longer term. Further, researchers should pay more attention to institutional risks.

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Section: Conceptual Frameworkmentioning

confidence: 99%

Section: Farmer's Willingness To Take Riskmentioning

confidence: 99%

Comparing risk perceptions and risk management in organic and conventional dairy farming: empirical results from Norway

Flåten¹,

Lien²,

Koesling

et al. 2005

Livestock Production Science

190

167

View full text Add to dashboard Cite

show abstract

“…If farmers are down-side risk averse and try to avoid possibilities of falling below certain income thresholds, this property can give an additional incentive to use irrigation (e.g. Moschini and Hennessy, 2000). While downside risk aversion is integrated in several economic studies that show its relevance for decision making processes of farmers (e.g.…”

Section: Introductionmentioning

confidence: 99%

Expanding risk consideration in integrated models – The role of downside risk aversion in irrigation decisions

Finger

2013

Environmental Modelling & Software

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“…As a result of unpredictable weather conditions, pest infestations, unstable markets, etc., risk effects have been of special interest in agriculture (Chavas and Holt, 1996;Moschini and Hennessy, 2001). A range of different techniques have been developed to model risk and risk preferences.…”

Section: Introductionmentioning

confidence: 99%

A dynamic dual model under state-contingent production uncertainty

Serra

Stefanou

2010

European Review of Agricultural Economics

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In this paper we assess how production costs and capital accumulation patterns in agriculture have evolved over time, by paying special attention to the influence of risk. A dynamic state-contingent cost minimization approach is applied to assess production decisions in US agriculture over the last century. Results suggest the relevance of allowing for the stochastic nature of the production function which permits to capture both the differences in the costs of producing under different states of nature, the differences in the evolution of these costs over time, as well as the differential impacts of different states of nature on investment decisions.

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Chapter 2 Uncertainty, risk aversion, and risk management for agricultural producers

Cited by 270 publications

References 175 publications

Comparing risk perceptions and risk management in organic and conventional dairy farming: empirical results from Norway

Comparing risk perceptions and risk management in organic and conventional dairy farming: empirical results from Norway

Expanding risk consideration in integrated models – The role of downside risk aversion in irrigation decisions

A dynamic dual model under state-contingent production uncertainty

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