Acreage Response under Varying Risk Preferences

The assumption in standard expected utility model formulations that the coefficient of risk aversion is a constant is potentially unrealistic. This study takes the standard linear expected meanvariance problem and replaces the coefficient of risk aversion with a function of risk aversion, allowing risk to be depicted as a constraint that farmers face. Treating output prices as stochastic, the theoretical formulation measures the impact price variability itself has on risk preferences. Acreage response elasticities are also estimated as a function of prices and price variances using U.S. county-level data for corn, soybean, and wheat producers.


Issue Date:
2012
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/142352
Published in:
Journal of Agricultural and Resource Economics, Volume 37, Number 3
Total Pages:
17




 Record created 2017-04-01, last modified 2017-08-26

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