Formation and adaptation of reference prices in grain marketing: An experimental study
AbstractThis study examines formation and adaptation of reference prices by Manitoban grain producers. Research shows that preferences are reference‐dependent and marketing decisions are affected by reference prices. Results suggest that Manitoban producers’ reference prices are formed primarily by an average of recent prices and the highest price to‐date in the marketing window. Reference prices are found to adapt in the same direction as market prices, with adaptation to increasing prices being larger than adaptation to decreasing prices. When deciding to sell grain, producers are more likely to sell when they expect prices to decrease over the next month and when their reference price adjusts downwards towards the current price.
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Bibliographic InfoPaper provided by Structure and Performance of Agriculture and Agri-products Industry (SPAA) in its series Working Papers with number 148591.
Date of creation: Apr 2013
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grain marketing; reference prices; Agribusiness; Crop Production/Industries; Institutional and Behavioral Economics; Risk and Uncertainty; C93; D03; D81; Q13;
Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-05-24 (Agricultural Economics)
- NEP-ALL-2013-05-24 (All new papers)
- NEP-CBE-2013-05-24 (Cognitive & Behavioural Economics)
- NEP-EXP-2013-05-24 (Experimental Economics)
- NEP-MKT-2013-05-24 (Marketing)
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