Risk, Utility and the Value of Information in Farmer Decision Making
A model is developed from decision theory for evaluating probabilistic information, especially for decision makers who are risk averse. The value of information to such a decision maker is disaggregated into mean and variance effects. It is shown that the degree of risk aversion of the decision maker may have important effects on the value attached to the information; however, there is not necessarily a positive correlation between risk aversion and the value of information, since the decision to acquire new information is itself often a risky decision. The concepts and procedures are illustrated by application to a fodder conservation decision with rainfall forecast information.
Volume (Year): 50 (1982)
Issue (Month): 03 (December)
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- Derek R. Byerlee & Jock R. Anderson, 1969.
"Value Of Predictors Of Uncontrolled Factors In Response Functions,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 13(2), pages 118-127, December.
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- Freebairn, John W., 1976. "Welfare Implications Of More Accurate Rational Forecast Prices," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 20(02), August.
- Anderson, Jock R. & Feder, Gershon, 2007. "Agricultural Extension," Handbook of Agricultural Economics, Elsevier.
- Robert E. Marks, 1980. "The Value of â€œAlmostâ€ Perfect Weather Information to the Australian Tertiary Sector," Australian Journal of Management, Australian School of Business, vol. 5(1-2), pages 67-85, April.
- Bradford, David F & Kelejian, Harry H, 1977. "The Value of Information for Crop Forecasting in a Market System: Some Theoretical Issues," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 519-31, October.
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