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The Efficiency Of Options Compared To, Fixed Price Contracts For Shifting Revenue Risk In Crop Production

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  • Heifner, R.G.
  • Plato, G.

Abstract

Stochastic simulation is used to compare the probability distributions of revenues from soybean production for pricing with put options and fixed—price contracts. By applying safety first, expected utility, and stochastic dominance criteria, fixed—price contracts are shown to be superior to options for shifting risks under many, but not all, conditions.

Suggested Citation

  • Heifner, R.G. & Plato, G., 1986. "The Efficiency Of Options Compared To, Fixed Price Contracts For Shifting Revenue Risk In Crop Production," 1986 Annual Meeting, July 27-30, Reno, Nevada 278169, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea86:278169
    DOI: 10.22004/ag.econ.278169
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    Cited by:

    1. Wright, Bruce H., 1988. "Options, Futures, and Agricultural Commodity Programs: Symposium Proceedings," Staff Reports 277992, United States Department of Agriculture, Economic Research Service.
    2. Heifner, Richard G. & Wright, Bruce H., 1989. "Potentials for Substituting Farmers' Use of Futures and Options for Farm Programs," Agricultural Economic Reports 308136, United States Department of Agriculture, Economic Research Service.

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