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Peasant Risk Aversion and Allocative Behavior: A Quadratic Programming Experiment

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  • Thomas B. Wiens

Abstract

A quadratic risk programming model is used to examine the impact of yield uncertainty on peasant allocation of land among crops and use of hired factor services. The assumption of an exponential utility of income function permits sample estimation of the extent of risk aversion and interpretation of the dual solutions as shadow prices. Historical survey data on a Chinese village are used to show that optimization qualified by risk aversion proves superior to risk neutrality or credit constraints in explaining peasant allocative behavior.

Suggested Citation

  • Thomas B. Wiens, 1976. "Peasant Risk Aversion and Allocative Behavior: A Quadratic Programming Experiment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(4_Part_1), pages 629-635.
  • Handle: RePEc:oup:ajagec:v:58:y:1976:i:4_part_1:p:629-635.
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    File URL: http://hdl.handle.net/10.2307/1238805
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    Cited by:

    1. Paris, Quirino, 1978. "Revenue And Cost Uncertainty, Generalized Mean-Variance And The Linear Complementarity Problem," Working Papers 225635, University of California, Davis, Department of Agricultural and Resource Economics.
    2. Inmaculada Rodríguez-Puerta & Alberto Álvarez-López, 2016. "Optimal allocation of a fixed production under price uncertainty," Annals of Operations Research, Springer, vol. 237(1), pages 121-142, February.
    3. Ridier, Aude & Ben El Ghali, Mohamed & Nguyen, G. & Kephaliacos, Charilaos, 2013. "The role of risk aversion and labor constraints in the adoption of low input practices supported by the CAP green payments in cash crop farms," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 94(2).
    4. Andrew J. Collins & Kasi Bharath Vegesana & Michael J. Seiler & Patrick O’Shea & Prasanna Hettiarachchi & Frederic McKenzie, 2013. "Simulation and mathematical programming decision-making support for smallholder farming," Environment Systems and Decisions, Springer, vol. 33(3), pages 427-439, September.
    5. Buccola, Steven T. & French, Ben C., 1978. "Long-Term Contracting Strategies for Agricultural Processing Firms With Particular Reference To Farmer Cooperatives," Research Reports 251945, University of California, Davis, Giannini Foundation.
    6. K. C. Schaefer, 1992. "A Portfolio Model For Evaluating Risk In Economic Development Projects, With An Application To Agriculture In Niger," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(3), pages 412-423, September.
    7. Inmaculada Rodríguez-Puerta & Alberto A. Álvarez-López, 2016. "Optimal allocation of a fixed production under price uncertainty," Annals of Operations Research, Springer, vol. 237(1), pages 121-142, February.
    8. Fang Su & Udoy SAIKIA & Iain HAY, 2019. "Impact of Perceived Livelihood Risk on Livelihood Strategies: A Case Study in Shiyang River Basin, China," Sustainability, MDPI, Open Access Journal, vol. 11(12), pages 1-1, June.
    9. Daniel E. May & Jaime Rodríguez, 2014. "Farmers’ Economic Behaviour: Current Research and Research Gaps," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 3(6), pages 362-369.

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