Trust and the Profitability of Rule-Breaking in Grain Production
AbstractMalpractice in food production entails unacceptable procedures and undesirable product qualities and other negative material outcomes. Despite their physical implications, behavioural sources of risk have become known as moral hazards. The probability of malpractice increases with attached profits. It decreases with the probability of disclosure and resulting losses. It also decreases with social values, emotional bonds etc. which prevent food producers from yielding to economic temptations. Trust can be generated both by reducing the profitability of malpractice and by enhancing social trust factors. Referring to Hennessy et al. (2003), who conclude that misdirected incentives are a major source of food risk, we focus on the former and analyse the incentives related to various regulations in grain production.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 99th Seminar, February 8-10, 2006, Bonn, Germany with number 7754.
Date of creation: 2006
Date of revision:
behavioural risk; moral hazard; incentive-compatibility; trust; Crop Production/Industries;
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