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An Evaluation Of Expected Value And Expected Value-Variance Criteria In Achieving Risk Efficiency In Crop Selection

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  • Reid, Donald W.
  • Tew, Bernard V.

Abstract

This article evaluates the performance of expected value and expected value-variance criteria in achieving risk efficiency in crop selection. Results indicate that the expected returns criterion achieves risk efficiency in many situations because of constraints. However, in the absence of many constraints the expected returns criterion performs poorly except when highly mean-dominant activities are present. The expected value-variance criterion achieves a high degree of risk efficiency for all situations examined. This result implies that criteria more complex than expected value-variance are not necessary for crop selection analysis, given empirical returns distributions.

Suggested Citation

  • Reid, Donald W. & Tew, Bernard V., 1987. "An Evaluation Of Expected Value And Expected Value-Variance Criteria In Achieving Risk Efficiency In Crop Selection," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 16(2), October.
  • Handle: RePEc:ags:nejare:28985
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    File URL: http://purl.umn.edu/28985
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    References listed on IDEAS

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    1. Meyer, Jack, 1977. "Choice among distributions," Journal of Economic Theory, Elsevier, vol. 14(2), pages 326-336, April.
    2. Lars Brink & Bruce McCarl, 1978. "The Tradeoff between Expected Return and Risk Among Cornbelt Farmers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(2), pages 259-263.
    3. Robert N. Collender & David Zilberman, 1985. "Land Allocation under Uncertainty for Alternative Specifications of Return Distributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 779-786.
    4. David A. Bessler, 1980. "Aggregated Personalistic Beliefs on Yields of Selected Crops Estimated Using ARIMA Processes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(4), pages 666-674.
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    Keywords

    Crop Production/Industries;

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