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Stochastic Efficiency Analysis Using Multiple Utility Functions

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  • Schumann, Keith D.
  • Richardson, James W.
  • Lien, Gudbrand D.
  • Hardaker, J. Brian

Abstract

Evaluating the risk of a particular decision depends on the risk aversion of the decision maker related to the underlying utility function. The objective of this paper is to use stochastic efficiency with respect to a function (SERF) to compare the ranking of risky alternatives using alternative utility functional forms.

Suggested Citation

  • Schumann, Keith D. & Richardson, James W. & Lien, Gudbrand D. & Hardaker, J. Brian, 2004. "Stochastic Efficiency Analysis Using Multiple Utility Functions," 2004 Annual meeting, August 1-4, Denver, CO 19957, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:19957
    DOI: 10.22004/ag.econ.19957
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    References listed on IDEAS

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    1. J. Brian Hardaker & James W. Richardson & Gudbrand Lien & Keith D. Schumann, 2004. "Stochastic efficiency analysis with risk aversion bounds: a simplified approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), pages 253-270, June.
    2. McCarl, Bruce A. & Bessler, David A., 1989. "Estimating An Upper Bound On The Pratt Risk A Version Coefficient When The Utility Function Is Unknown," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 33(01), pages 1-8, April.
    3. Meyer, Jack, 1977. "Choice among distributions," Journal of Economic Theory, Elsevier, vol. 14(2), pages 326-336, April.
    4. Matthew Rabin, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Econometrica, Econometric Society, vol. 68(5), pages 1281-1292, September.
    5. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, October.
    6. Anderson, Jock R. & Feder, Gershon, 2007. "Agricultural Extension," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 44, pages 2343-2378, Elsevier.
    7. Atanu Saha, 1993. "Expo-Power Utility: A ‘Flexible’ Form for Absolute and Relative Risk Aversion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 905-913.
    8. G. Hanoch & H. Levy, 1969. "The Efficiency Analysis of Choices Involving Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(3), pages 335-346.
    9. Robert P. King & Lindon J. Robison, 1981. "An Interval Approach to Measuring Decision Maker Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(3), pages 510-520.
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    Cited by:

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    2. Williams, Jeffery R. & Llewelyn, Richard V. & Pendell, Dustin L. & Schlegel, Alan J. & Troy, Dumler, 2009. "A Risk Analysis of Converting CRP Acres to a Wheat-Sorghum-Fallow Rotation," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 45985, Southern Agricultural Economics Association.
    3. Williams, Jeffery R. & Saffert, Andrew T. & Barnaby, Glenn Arthur, Jr. & Llewelyn, Richard V. & Langemeier, Michael R., 2014. "A Risk Analysis of Adjusted Gross Revenue-Lite on Beef Farms," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 46(2), pages 1-18, May.
    4. Dustin L. Pendell & Jeffery R. Williams & Scott B. Boyles & Charles W. Rice & Richard G. Nelson, 2007. "Soil Carbon Sequestration Strategies with Alternative Tillage and Nitrogen Sources under Risk," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 247-268.
    5. Adusumilli, Naveen & Wang, Hua & Dodla, Syam & Deliberto, Michael, 2020. "Estimating risk premiums for adopting no-till and cover crops management practices in soybean production system using stochastic efficiency approach," Agricultural Systems, Elsevier, vol. 178(C).
    6. Yangxuan Liu & Michael R. Langemeier & Ian M. Small & Laura Joseph & William E. Fry & Jean B. Ristaino & Amanda Saville & Benjamin M. Gramig & Paul V. Preckel, 2018. "A Risk Analysis of Precision Agriculture Technology to Manage Tomato Late Blight," Sustainability, MDPI, vol. 10(9), pages 1-19, August.
    7. Williams, Jeffery R. & Pachta, Matthew J. & Roozeboom, Kraig L. & Llewelyn, Richard V. & Claassen, Mark M. & Bergtold, Jason S., 2012. "Risk Analysis of Tillage and Crop Rotation Alternatives with Winter Wheat," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(4), pages 1-16, November.
    8. Schenk, Joep & Hellegers, Petra & van Asseldonk, Marcel & Davidson, Brian, 2014. "How do farmers react to varying water allocations? An assessment of how the attitude to risk affects farm incomes," Agricultural Water Management, Elsevier, vol. 136(C), pages 52-58.
    9. Williams, Jeffery R. & Pachta, Matthew J. & Claassen, Mark & Roozeboom, Kraig & Llewelyn, Richard, 2011. "Wheat Stubble To Burn or Not to Burn: An Economic Analysis," Western Economics Forum, Western Agricultural Economics Association, vol. 10(01), pages 1-11.

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