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Probabilities for decision analysis in agriculture and rural resource economics: The need for a paradigm change

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  • Hardaker, J. Brian
  • Lien, Gudbrand
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    Abstract

    The notion that we can rationalize risky choice in terms of expected utility appears to be widely if not universally accepted in the agricultural and resource economics profession. While there have been many attempts to assess the risk preferences of farmers, there are few studies of their beliefs about uncertain events encoded as probabilities. We may attribute this neglect to scepticism in the profession about the concept of subjective probability. The general unwillingness to embrace this theory and its associated methods has all too often caused researchers to focus on problems for which frequency data are available, rather than on problems that are more important where data are generally sparse or lacking. In response, we provide a brief reminder of the merits of the subjectivist approach and extract some priorities for future research should there be a change of heart among at least some of the profession.

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    Bibliographic Info

    Article provided by Elsevier in its journal Agricultural Systems.

    Volume (Year): 103 (2010)
    Issue (Month): 6 (July)
    Pages: 345-350

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    Handle: RePEc:eee:agisys:v:103:y:2010:i:6:p:345-350

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    Web page: http://www.elsevier.com/locate/agsy

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    Keywords: Decision analysis Risk and uncertainty Subjective probabilities;

    References

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    Cited by:
    1. Monjardino, Marta & McBeath, T. & Brennan, Lisa E. & Llewellyn, Rick S., 2012. "Revisiting N fertilisation rates in low-rainfall grain cropping regions of Australia: A risk analysis," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124339, Australian Agricultural and Resource Economics Society.
    2. de Mey, Yann & Wauters, Erwin & van Winsen, Frankwin & Vancauteren, Mark & Van Passel, Steven & Lauwers, Ludwig H., 2012. "From total farm to household risk: implication for risk management," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122470, European Association of Agricultural Economists.
    3. Hardaker, J.B. & Lien, Gudbrand, 2010. "Stochastic efficiency analysis with risk aversion bounds: a comment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(3), September.
    4. van Winsen, Frankwin & de Mey, Yann & Lauwers, Ludwig & Van Passel, Steven & Vancauteren, Mark & Wauters, Erwin, 2013. "Cognitive mapping: A method to elucidate and present farmers’ risk perception," Agricultural Systems, Elsevier, vol. 122(C), pages 42-52.
    5. Monjardino, Marta & McBeath, T. & Brennan, Lisa E. & Llewellyn, Rick S., 2012. "Are farmers in low-rainfall cropping regions under-fertilizing? An Australian case-study," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 124976, International Association of Agricultural Economists.
    6. Kandulu, John, 2011. "Assessing the potential for beneficial diversification in rain-fed agricultural enterprises," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100568, Australian Agricultural and Resource Economics Society.

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