Joint Estimation of Risk Preferences and Technology: Flexible Utility or Futility?
AbstractA thought experiment is designed to investigate whether the structure of risk aversion (i.e., the changes in absolute or relative risk aversion associated with changes in wealth) can be estimated with reasonable precision from agricultural production data. Findings strongly suggest that typical production data are unlikely to allow identification of the structure of risk aversion. A flexible-utility parameterization is found to slightly worsen technology parameter estimates. Results also indicate that even under a restricted-utility specification, utility parameter estimates are biased. Further, their quality is much worse when shocks are not large or samples are small. Copyright 2007, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 91 (2007)
Issue (Month): 3 ()
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- Lence, Sergio H., 2007. "Joint Estimation of Risk Preferences and Technology: Flexible Utility of Futility?," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9980, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Lence, Sergio H., 2009. "Joint Estimation of Risk Preferences and Technology: Flexible Utility or Futility?," Staff General Research Papers 13028, Iowa State University, Department of Economics.
- C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
- D20 - Microeconomics - - Production and Organizations - - - General
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
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