Determinants Of The Value Of Site-Specific Information (Ssi) In Agriculture: A Unifying Theory To Analyze Its Relative Impacts
This paper develops a theoretically consistent behavioral model of farmer decision-making that allows for analysis of the relative impacts of the determinants of SSI value. The model departs from previous literature by assuming that SSI reduces uncertainty, but not eliminate it. Results show that increasing the accuracy (or the "level of informativeness") of SSI, increasing initial wealth, improving management ability to reduce uncertainty in the posterior, and increasing the uncertainty in the prior, increases the value of SSI. Furthermore, mean input use is found to decrease, as SSI becomes more "informative." On the other hand, the value of SSI is found to be decreasing as relative risk aversion increases. These results have policy implications for controlling non-point source pollution from fertilizer inputs and SSI-adoption behavior.
|Date of creation:||2000|
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- Gregory R. Pautsch & Bruce A. Babcock & F. Jay Breidt, 1999.
"Optimal Information Acquisition under a Geostatistical Model,"
Center for Agricultural and Rural Development (CARD) Publications
99-wp217, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Pautsch, Gregory R. & Babcock, Bruce A. & Breidt, F. Jay, 1999. "Optimal Information Acquisition Under A Geostatistical Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
- Pautsch, Gregory R. & Babcock, Bruce A. & Breidt, F. J., 1999. "Optimal Information Acquisition Under a Geostatistical Model," Staff General Research Papers Archive 1517, Iowa State University, Department of Economics.
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- Hennessy, David A. & Babcock, Bruce A., 1998. "Information, flexibility, and value added1," Information Economics and Policy, Elsevier, vol. 10(4), pages 431-449, December.
- Lins, David A. & Gabriel, Stephen C. & Sonka, Steven T., 1981. "An Analysis Of The Risk Aversion Of Farm Operators: An Asset Portfolio Approach," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(01), July.
- Atanu Saha & C. Richard Shumway & Hovav Talpaz, 1994. "Joint Estimation of Risk Preference Structure and Technology Using Expo-Power Utility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 173-184.
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