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Risk, Utility and the Value of Information in Farmer Decision Making

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Author Info

  • Byerlee, Derek R.
  • Anderson, Jock R.

Abstract

A model is developed from decision theory for evaluating probabilistic information, especially for decision makers who are risk averse. The value of information to such a decision maker is disaggregated into mean and variance effects. It is shown that the degree of risk aversion of the decision maker may have important effects on the value attached to the information; however, there is not necessarily a positive correlation between risk aversion and the value of information, since the decision to acquire new information is itself often a risky decision. The concepts and procedures are illustrated by application to a fodder conservation decision with rainfall forecast information.

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File URL: http://purl.umn.edu/12524
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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Review of Marketing and Agricultural Economics.

Volume (Year): 50 (1982)
Issue (Month): 03 (December)
Pages:

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Handle: RePEc:ags:remaae:12524

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Related research

Keywords: Farm Management; Risk and Uncertainty;

References

References listed on IDEAS
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  1. Anderson, Jock R. & Feder, Gershon, 2007. "Agricultural Extension," Handbook of Agricultural Economics, Elsevier.
  2. Freebairn, John W., 1976. "Welfare Implications Of More Accurate Rational Forecast Prices," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 20(02), August.
  3. Derek R. Byerlee & Jock R. Anderson, 1969. "Value Of Predictors Of Uncontrolled Factors In Response Functions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 13(2), pages 118-127, December.
  4. Green, Jerry R, 1981. "Value of Information with Sequential Futures Markets," Econometrica, Econometric Society, vol. 49(2), pages 335-58, March.
  5. Hayami, Yujiro & Peterson, Willis, 1972. "Social Returns to Public Information Services: Statistical Reporting of U. S. Farm Commodities," American Economic Review, American Economic Association, vol. 62(1), pages 119-30, March.
  6. Bradford, David F & Kelejian, Harry H, 1977. "The Value of Information for Crop Forecasting in a Market System: Some Theoretical Issues," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 519-31, October.
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Citations

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Cited by:
  1. Lybbert, Travis J. & Magnan, Nicholas & Gubler, W. Douglas, 2012. "Multi-Dimensional Responses to Risk Information: How do Winegrape Growers Respond to Disease Forecasts and to What Environmental Effect?," Working Papers 162521, Robert Mondavi Institute Center for Wine Economics.
  2. Lindner, Robert K., 1987. "Toward A Framework For Evaluating Agricultural Economics Research," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(02), August.
  3. Williams, John & Malcolm, Bill, 2012. "Farmer decisions about selling wheat and managing wheat price risk in Australia," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 20.
  4. Goh, Siew & Shih, Chao-Chyuan & Cochran, Mark J. & Raskin, Rob, 1989. "A Generalized Stochastic Dominance Program For The Ibm Pc," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 21(02), December.
  5. Ritchie, John W. & Abawi, G. Yahya & Dutta, Sunil C. & Harris, Trevor R. & Bange, Michael, 2004. "Risk management strategies using seasonal climate forecasting in irrigated cotton production: a tale of stochastic dominance," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), March.
  6. Pandey, Sushil, 1990. "Risk-Efficient Irrigation Strategies for Wheat," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 4(1), April.
  7. Meinke, H. & Baethgen, W. E. & Carberry, P. S. & Donatelli, M. & Hammer, G. L. & Selvaraju, R. & Stockle, C. O., 2001. "Increasing profits and reducing risks in crop production using participatory systems simulation approaches," Agricultural Systems, Elsevier, vol. 70(2-3), pages 493-513.
  8. Anderson, Jock R., 1997. "Policy and Management Work within International Agricultural Research," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(4), December.
  9. Marshall, Graham R. & Parton, Kevin A. & Hammer, G.L., 1996. "Risk Attitude, Planting Conditions And The Value Of Seasonal Forecasts To A Dryland Wheat Grower," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(03), December.
  10. Petersen, E. H. & Fraser, R. W., 2001. "An assessment of the value of seasonal forecasting technology for Western Australian farmers," Agricultural Systems, Elsevier, vol. 70(1), pages 259-274, October.

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