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Choice of utility function form: its effect on classification of risk preferences and the prediction of farmer decisions

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  • Zuhair, Sugu M. M.
  • Taylor, Daniel B.
  • Kramer, Randall A.

Abstract

In applications of expected utility analysis, researchers are confronted with a choice among several utility functional forms. Subjective utility values and probability distributions for price and yield were elicited from Sri Lankan producers of minor export crops. Exponential quadratic and cubic utility functions were estimated. The choice of functional form was found to affect both the classification of risk attitudes and the prediction of harvesting strategy. The exponential function was the best predictor of harvesting strategy because it was the best predictor of mature harvesting. All three functions were equally poor predictors of premature harvesting.
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  • Zuhair, Sugu M. M. & Taylor, Daniel B. & Kramer, Randall A., 1992. "Choice of utility function form: its effect on classification of risk preferences and the prediction of farmer decisions," Agricultural Economics, Blackwell, vol. 6(4), pages 333-344, April.
    • Handle: RePEc:eee:agecon:v:6:y:1992:i:4:p:333-344
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    1. SHIBAYAMA, Sotaro & MATTSSON, Pauline & BROSTRÖM, Anders, 2026. "Risk in science: The socialization of risk-taking in early-career training," Research Policy, Elsevier, vol. 55(1).
    2. Jeahan Jung & Jeong-Yoo Kim, 2019. "Cheap Talk by Two Senders in the Presence of Network Externalities," Korean Economic Review, Korean Economic Association, vol. 35, pages 249-274.
    3. Torkamani, Javad, 2006. "Measuring and Incorporating Farmers’ Personal Beliefs and Preferences about Uncertain Events in Decision Analysis: A Stochastic Programming Experiment," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 61(2), pages 1-15.
    4. Lelyon, Baptiste & Chatelier, Vincent & Daniel, Karine, 2011. "Decoupling and prices: determinant of dairy farmers’ choices?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(01).
    5. Jeahan Jung & Jeong Yoo Kim, 2024. "Cheap Talk with Transparent and Monotone Motives from a Seller to an Informed Buyer," Games, MDPI, vol. 15(3), pages 1-20, May.
    6. Yan Jin & Dušan Drabik, 2022. "CRISPR Rice vs conventional rice dilemma of a Chinese farmer," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(2), pages 424-446, April.
    7. Torkamani, Javad, 2005. "Using a whole-farm modelling approach to assess prospective technologies under uncertainty," Agricultural Systems, Elsevier, vol. 85(2), pages 138-154, August.
    8. Ceddia, M.G. & Heikkil, J. & Peltola, J., 2009. "Managing invasive alien species with professional and hobby farmers: Insights from ecological-economic modelling," Ecological Economics, Elsevier, vol. 68(5), pages 1366-1374, March.
    9. Hanukov, Gabi, 2022. "A service system where junior servers approach a senior server on behalf of customers," International Journal of Production Economics, Elsevier, vol. 244(C).

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