A structural estimation of French farmers’ risk preferences: an artefactual field experiment
AbstractWe designed an artefactual field experiment involving real payments to elicit French farmers’ risk preferences. We test for two descriptions of farmers’ behaviour: expected utility and cumulative prospect theory and for preference stability across context (price risk and yield risk). We use multiple price lists where farmers make series of choices between two lotteries with varying probabilities and outcomes in the gain and loss domains. We estimate parameters describing farmers’ risk preferences derived from structural models. We find farmers are slightly risk averse in the expected utility framework. In the cumulative prospect theory frame, we find farmers display either loss aversion or probability weighting, tending to overweight small probabilities and to underweight high probabilities. We also estimate the reference point and find it not significantly different from zero. Cumulative prospect theory is a better description of farmers’ risk attitudes. We find risk preferences vary across context.
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Bibliographic InfoPaper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 201106.
Length: 17 pages
Date of creation: 2011
Date of revision:
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More information through EDIRC
risk attitudes; field experiment; farmer;
Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-06-13 (Agricultural Economics)
- NEP-ALL-2012-06-13 (All new papers)
- NEP-CBE-2012-06-13 (Cognitive & Behavioural Economics)
- NEP-EXP-2012-06-13 (Experimental Economics)
- NEP-UPT-2012-06-13 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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