IDEAS home Printed from https://ideas.repec.org/p/ags/aaea26/404409.html

Higher-Order Risk Preferences and Risk-Management Behavior: Evidence from Italian Winegrowers

Author

Listed:
  • Barba, Francesca R.
  • Drichoutis, Andreas
  • Palma, Marco A.
  • Cerroni, Simone

Abstract

Risk preferences play a central role in farmers’ decisions, such as technology adoption, diversification, and uptake of insurance and other risk-management tools; yet agricultural economics has largely focused on risk aversion, while higher-order risk preferences remain less explored. This paper studies the external validity of experimentally elicited risk aversion, prudence, and temperance in a sample of 162 Italian winegrowers. Preferences are measured through incentivized binary lottery choices and linked to stated intentions, self-reported risk-management behavior, and an observed preventive-technology adoption. Preliminary results show that all three attitudes are present in the sample and capture distinct behavioral dimensions. Risk aversion has no systematic association with external outcomes. Prudence is positively related to stated intentions, but not to observed behavior. Temperance is associated with current insurance status and with the absence of active defense practice adoption. Overall, higher-order risk preferences show limited, outcome-specific external validity for agricultural risk-management behavior.

Suggested Citation

  • Barba, Francesca R. & Drichoutis, Andreas & Palma, Marco A. & Cerroni, Simone, 2026. "Higher-Order Risk Preferences and Risk-Management Behavior: Evidence from Italian Winegrowers," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404409, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea26:404409
    DOI: 10.22004/ag.econ.404409
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/404409/files/177490_182394_115232_HOR_AAEA.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.404409?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Amir K. Abadi Ghadim & David J. Pannell & Michael P. Burton, 2005. "Risk, uncertainty, and learning in adoption of a crop innovation," Agricultural Economics, International Association of Agricultural Economists, vol. 33(1), pages 1-9, July.
    2. Charles N. Noussair & Stefan T. Trautmann & Gijs van de Kuilen, 2014. "Higher Order Risk Attitudes, Demographics, and Financial Decisions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(1), pages 325-355.
    3. Timo R. Lambregts & Paul Bruggen & Han Bleichrodt, 2021. "Insurance decisions under nonperformance risk and ambiguity," Journal of Risk and Uncertainty, Springer, vol. 63(3), pages 229-253, December.
    4. Dionne, Georges & Eeckhoudt, Louis, 1985. "Self-insurance, self-protection and increased risk aversion," Economics Letters, Elsevier, vol. 17(1-2), pages 39-42.
    5. Daniel Hellerstein & Nathaniel Higgins & John Horowitz, 2013. "The predictive power of risk preference measures for farming decisions -super-†," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(5), pages 807-833, December.
    6. Ryan Oprea, 2024. "Decisions under Risk Are Decisions under Complexity," American Economic Review, American Economic Association, vol. 114(12), pages 3789-3811, December.
    7. Poorvi Iyer & Martina Bozzola & Stefan Hirsch & Manuela Meraner & Robert Finger, 2020. "Measuring Farmer Risk Preferences in Europe: A Systematic Review," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(1), pages 3-26, February.
    8. Sebastian O. Schneider & Matthias Sutter, 2026. "Risk Preferences and Field Behavior: The Relevance of Higher-Order Risk Preferences," American Economic Review, American Economic Association, vol. 116(1), pages 88-118, January.
    9. Viviana Garcia & Chloe McCallum & Robert Finger, 2024. "Heterogeneity of European farmers’ risk preferences: an individual participant data meta-analysis," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 51(3), pages 725-778.
    10. Cary Deck & Harris Schlesinger, 2014. "Consistency of Higher Order Risk Preferences," Econometrica, Econometric Society, vol. 82(5), pages 1913-1943, September.
    11. Louis Eeckhoudt & Harris Schlesinger, 2006. "Putting Risk in Its Proper Place," American Economic Review, American Economic Association, vol. 96(1), pages 280-289, March.
    12. Cary Deck & Harris Schlesinger, 2010. "Exploring Higher Order Risk Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1403-1420.
    13. Marianne Lefebvre & Yann Raineau & Cécile Aubert & Niklas Möhring & Pauline Pedehour & Marc Raynal, 2024. "Green Insurance for Pesticide Reduction: Acceptability and Impact for French Viticulture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 51(5), pages 1201-1272.
    14. Trautmann, Stefan T. & Kuilen, Gijs van de, 2018. "Higher order risk attitudes: A review of experimental evidence," European Economic Review, Elsevier, vol. 103(C), pages 108-124.
    15. Robert Finger & David Wüpper & Chloe McCallum, 2023. "The (in)stability of farmer risk preferences," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(1), pages 155-167, February.
    16. Louis Eeckhoudt & Christian Gollier, 2005. "The impact of prudence on optimal prevention," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 989-994, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mayrhofer, Thomas & Schmitz, Hendrik, 2025. "Prudence and prevention – empirical evidence," Economics Letters, Elsevier, vol. 257(C).
    2. van Bruggen, Paul & Laeven, Roger J. A. & van de Kuilen, Gijs, 2024. "Higher-Order Risk Attitudes for Non-Expected Utility," Discussion Paper 2024-019, Tilburg University, Center for Economic Research.
    3. Schneider, Sebastian O. & Sutter, Matthias, 2020. "Higher Order Risk Preferences: Experimental Measures, Determinants and Related Field Behavior," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224643, Verein für Socialpolitik / German Economic Association.
    4. Haering, Alexander, 2021. "Framing decisions in experiments on higher-order risk preferences," Ruhr Economic Papers 913, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Takehito Masuda & Eungik Lee, 2019. "Higher order risk attitudes and prevention under different timings of loss," Experimental Economics, Springer;Economic Science Association, vol. 22(1), pages 197-215, March.
    6. Han (H.) Bleichrodt & Paul van Bruggen, 2018. "Reflection for higher order risk preferences," Tinbergen Institute Discussion Papers 18-079/I, Tinbergen Institute.
    7. Liqun Liu & Nicolas Treich, 2021. "Optimality of winner-take-all contests: the role of attitudes toward risk," Journal of Risk and Uncertainty, Springer, vol. 63(1), pages 1-25, August.
    8. Brunette, Marielle & Jacob, Julien, 2019. "Risk aversion, prudence and temperance: An experiment in gain and loss," Research in Economics, Elsevier, vol. 73(2), pages 174-189.
    9. Konstantinos Georgalos & Ivan Paya & David Peel, 2023. "Higher order risk attitudes: new model insights and heterogeneity of preferences," Experimental Economics, Springer;Economic Science Association, vol. 26(1), pages 145-192, March.
    10. Cary Deck & Rachel J. Huang & Larry Y. Tzeng & Lin Zhao, 2025. "A Simple Approach for Measuring Higher-Order Arrow-Pratt Coefficients of Risk Aversion," Management Science, INFORMS, vol. 71(8), pages 6979-6996, August.
    11. Attema, Arthur E. & l’Haridon, Olivier & van de Kuilen, Gijs, 2019. "Measuring multivariate risk preferences in the health domain," Journal of Health Economics, Elsevier, vol. 64(C), pages 15-24.
    12. Georgalos, Konstantinos & Paya, Ivan & Peel, David, 2024. "The Kőszegi–Rabin expectations-based model and risk-apportionment tasks for elicitation of higher order risk preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 749-770.
    13. Eeckhoudt, Louis R. & Laeven, Roger J.A. & Schlesinger, Harris, 2020. "Risk apportionment: The dual story," Journal of Economic Theory, Elsevier, vol. 185(C).
    14. Timo Heinrich & Thomas Mayrhofer, 2014. "Higher-order Risk Preferences in Social Settings - An Experimental Analysis," Ruhr Economic Papers 0508, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    15. Irene Mussio & Maximiliano Sosa Andrés & Abdul H Kidwai, 2023. "Higher order risk attitudes in the time of COVID-19: an experimental study," Oxford Economic Papers, Oxford University Press, vol. 75(1), pages 163-182.
    16. Kanchan Joshi & Thiagu Ranganathan & Ram Ranjan, 2021. "Exploring Higher Order Risk Preferences of Farmers in a Water-Scarce Region: Evidence from a Field Experiment in West Bengal, India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(2), pages 317-344, June.
    17. Bottasso, Anna & Duchêne, Sébastien & Guerci, Eric & Hanaki, Nobuyuki & Noussair, Charles N., 2022. "Higher order risk attitudes of financial experts," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    18. Ivan Paya & David A. Peel & Konstantinos Georgalos, 2023. "On the predictions of cumulative prospect theory for third and fourth order risk preferences," Theory and Decision, Springer, vol. 95(2), pages 337-359, August.
    19. Georgalos, Konstantinos & Paya, Ivan & Peel, David A., 2021. "On the contribution of the Markowitz model of utility to explain risky choice in experimental research," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 527-543.
    20. Sebastian Ebert & Paul Karehnke, 2025. "First-Order Prudence and Its Implications for Precautionary Savings and the Risk-Free Rate," Operations Research, INFORMS, vol. 73(6), pages 3156-3172, November.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea26:404409. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.