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Choice of Utility Functional Form: Its Effect on Classification of Risk Preferences and the Prediction of Farmer Decisions

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  • Zuhair, Segu M. M.
  • Taylor, Daniel B.
  • Kramer, Randall A.

Abstract

Subjective utility values were elicited from Sri Lankan producers of minor export crops. Exponential, quadratic, and cubic utility functions were estimated. The choice of functional form was found to affect both the classification of risk attitudes and the prediction of harvesting strategy.

Suggested Citation

  • Zuhair, Segu M. M. & Taylor, Daniel B. & Kramer, Randall A., 1987. "Choice of Utility Functional Form: Its Effect on Classification of Risk Preferences and the Prediction of Farmer Decisions," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270141, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea87:270141
    DOI: 10.22004/ag.econ.270141
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    References listed on IDEAS

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    1. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, July.
    2. H. M. G. Herath & J. Brian Hardaker & Jock R. Anderson, 1982. "Choice of Varieties by Sri Lanka Rice Farmers: Comparing Alternative Decision Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(1), pages 87-93.
    3. William Lin & G. W. Dean & C. V. Moore, 1974. "An Empirical Test of Utility vs. Profit Maximization in Agricultural Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 497-508.
    4. Musser, Wesley N. & Wetzstein, Michael E. & Reece, Susan Y. & Musser, Lynn M. & Varca, Philip E. & Chou, Charlene C.J., 1984. "Classification Of Risk Preferences With Elicited Utility Data: Does Functional Form Matter?," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 9(2), pages 1-7, December.
    5. Hanoch, Giora & Levy, Haim, 1970. "Efficient Portfolio Selection with Quadratic and Cubic Utility," The Journal of Business, University of Chicago Press, vol. 43(2), pages 181-189, April.
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    Cited by:

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    5. Jeahan Jung & Jeong-Yoo Kim, 2019. "Cheap Talk by Two Senders in the Presence of Network Externalities," Korean Economic Review, Korean Economic Association, vol. 35, pages 249-274.
    6. Torkamani, Javad, 2005. "Using a whole-farm modelling approach to assess prospective technologies under uncertainty," Agricultural Systems, Elsevier, vol. 85(2), pages 138-154, August.
    7. Torkamani, Javad, 2006. "Measuring and Incorporating Farmers’ Personal Beliefs and Preferences about Uncertain Events in Decision Analysis: A Stochastic Programming Experiment," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 61(2), pages 1-15.

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