Are Brazilian corn farmers overconfident about prices?
This paper aims to identify signs of overconfidence among corn producers in south and central-west Brazil. Over the period from October to November 2008, farmers were chosen to answer questions regarding their knowledge of futures markets and price expectations. A large part of subjects responded they do not trade futures contracts because they do not have enough information on the subject. The results show respondents were miscalibrated when estimating directly-stated and the indirectly-stated expected prices. In addition, for certain respondents, subjective variance for corn proves to be significantly less than the market variance. Finally, the paper concludes that the overconfidence effect can partially explain the low use of futures markets by Brazilian corn producers.
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