Specification of Micro Risk Models for Farm Management and Policy Research
This paper illustrates a new methodology for finding preferred action choice(s) under uncertainty for well-defined classes of decision-makers The methodology does not replace the expected utility maximizing rule, which has been used to identify preferred action choices; rather it extends the rule's accuracy as a positivistic tool and its reliability as a normative guide. The methodology used in this paper does, however, alter the kinds of information needed about decision- makers. Hence, it is related to a practical question facing the Western Regional Research Committee (W-149). This committee is considering estimating utility functions for a large number of decision-makers differentiated by geographic area, commodity produced, farm size, wealth, and other variables and they want to know the value of such a project. Because there was no consensus among the committee, a subcommittee was appointed to explore the question in more detail. This paper can be considered part of that exploration. The remainder of this paper has four parts. In the first, we compare our current interest in utility functions with an earlier interest in production functions and note some similarities. The second part describes how stochastic dominance with respect to a function can be used to identify preferred action choices under uncertainty. The third part illustrates the criterion with a numerical example. And the fourth part concludes with our recommendation for future work on specifying micro risk models.
|Date of creation:||1978|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (517) 355-4563
Fax: (517) 432-1800
Web page: http://www.aec.msu.edu/agecon/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- D. Cass & J. E. Stiglitz, 1972. "Risk Aversion and Wealth Effects on Portfolios with Many Assets," Review of Economic Studies, Oxford University Press, vol. 39(3), pages 331-354.
- Anderson, Jock R., 1975.
"Programming For Efficient Planning Against Non-Normal Risk,"
Australian Journal of Agricultural Economics,
Australian Agricultural and Resource Economics Society, vol. 19(02), August.
- Jock R. Anderson, 1975. "Programming For Efficient Planning Against Non‐Normal Risk," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 19(2), pages 94-107, 08.
- Meyer, Jack, 1977. "Choice among distributions," Journal of Economic Theory, Elsevier, vol. 14(2), pages 326-336, April.
When requesting a correction, please mention this item's handle: RePEc:ags:midaae:10260. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.