Use of strategies and decision rules by Australian wool producers to manage uncertainty
Decisions by Australian wool producers were modelled with a technique combining personal construct psychology and hierarchical decision models. Both strategic and tactical approaches were evident in wool producersâ€™ responses to the risks associated with producing and marketing their wool. Strategic responses included avoiding short to medium-term response to price changes, diversification, maintaining equity and selling wool at auction in the same sale each year. Producers identified many types of risk, with each engendering a distinctive response. Similarly the context of a decision appeared to have a major influence on the attitude to risk. Simplifying decision rules were apparent that helped producers deal with the physical, information, and processing constraints of an ambiguous decision-making environment. One implication of these results may be that prescriptive advice must recognise the importance of strategy and decision rules as a response to uncertainty and ambiguity. A second is that such advice should also take account of the influence of context on attitude to risk and ambiguity.
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