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Agricultural Risk Aversion Revisited: A Multicriteria Decision-Making Approach

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  • Gomez-Limon, Jose Antonio
  • Riesgo, Laura
  • Arriaza Balmon, Manuel
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    Abstract

    In modelling farm systems it is widely accepted that risk plays a central role. Furthermore, farmers' risk aversion determines their decisions in both the short and the long run. This paper presents a methodology based on multiple criteria mathematical programming to obtain relative and absolute risk aversion coefficients. We rely on multiattribute utility theory (MAUT) to elicit a separable additive multiattribute utility function and then estimate the risk aversion coefficients and apply this methodology to an irrigated area of Northern Spain. The results show a wide variety of attitudes to risk among farmers, who mainly exhibit decreasing absolute risk aversion (DARA) and constant relative risk aversion (CRRA).

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 2002 International Congress, August 28-31, 2002, Zaragoza, Spain with number 24827.

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    Date of creation: 2002
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    Handle: RePEc:ags:eaae02:24827

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    Related research

    Keywords: Risk analysis; Agriculture; Utility theory; Multiple criteria analysis; Risk and Uncertainty;

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    Cited by:
    1. Gomez-Limon, Jose Antonio & Riesgo, Laura & Arriaza Balmon, Manuel, 2003. "Multi-Criteria Analysis Of Factors Use Level: The Case Of Water For Irrigation," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa, International Association of Agricultural Economists 25836, International Association of Agricultural Economists.
    2. Stelios Rozakis & Akin Kazakci & Jean-Claude Sourie, 2009. "Min-max regret versus gross margin maximization in arable sector modeling," Working Papers 2009-01, Agricultural University of Athens, Department Of Agricultural Economics.

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