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Stochastic Production and Heterogeneous Risk Preferences: Commercial Fishers' Gear Choices

  • Håkan Eggert
  • Ragnar Tveteras

We present a model of fishers' gear choice, which allows for heterogeneity both in production technology and risk preferences and apply it on a panel of Swedish trawlers. Stochastic revenue functions are estimated and used to predict the mean and standard deviation of revenue for each trip. In a random-parameters logit model, we test if these predicted values explain gear choice. A majority of fishers respond positively to increased mean and negatively to increased variability of expected landing values, indicating risk aversion, but also show a strong tendency to choose the same gear used on the previous trip. Copyright 2004, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.0092-5853.2004.00572.x
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Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 86 (2004)
Issue (Month): 1 ()
Pages: 199-212

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Handle: RePEc:oup:ajagec:v:86:y:2004:i:1:p:199-212
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