IDEAS home Printed from https://ideas.repec.org/p/aua/wpaper/2009-01.html
   My bibliography  Save this paper

Min-max regret versus gross margin maximization in arable sector modeling

Author

Listed:
  • Stelios Rozakis

    () (Agricultural Economics and Rural Development Department, Agricultural University of Athens)

  • Akin Kazakci

    () (LAMSADE, Universite de Paris X-Dauphine)

  • Jean-Claude Sourie

    () (Production Economics Group, S²A²E², INRA-Grignon)

Abstract

"A sector model presented in this article, uses about 200 representative French cereal-oriented farms to estimate policy impacts by means of mathematical modeling. Usually, such models suppose that farmers intend to maximize expected gross margin. This rationality hypothesis however seems hardly justifiable, especially these days, when gross margin variability due to European Common Agricultural Policy changes may become significant. Increasing uncertainty introduces bounded rationality to the decision problem so that crop gross margins may be better approximated by interval rather than by expected (precise) values. The initial LP problem is specified as an “Interval Linear Programming (ILP)”. We assume that farmers tend to decide upon their surface allocation prudently in order to get through with minimum loss, which is precisely the rationale underlying the minimization of maximum regret decision criterion. Recent advances in operations research, namely Mausser and Laguna algorithms, are exploited to implement the min-max regret criterion to arable agriculture ILP. The validation against observed crop mix proved that as uncertainty increases about 40% of the farmers adopt the min-max regret decision rule instead of the gross margin maximization."

Suggested Citation

  • Stelios Rozakis & Akin Kazakci & Jean-Claude Sourie, 2009. "Min-max regret versus gross margin maximization in arable sector modeling," Working Papers 2009-01, Agricultural University of Athens, Department Of Agricultural Economics.
  • Handle: RePEc:aua:wpaper:2009-01
    as

    Download full text from publisher

    File URL: http://aoatools.aua.gr/RePEc/aua/wpaper/files/2009-1_ILPpaper_090224.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gomez-Limon, Jose Antonio & Riesgo, Laura & Arriaza Balmón, Manuel, 2002. "Agricultural Risk Aversion Revisited: A Multicriteria Decision-Making Approach," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24827, European Association of Agricultural Economists.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Interval Linear Programming; Min-Max Regret; Common Agricultural Policy; Arable cropping; France;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

    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:aua:wpaper:2009-01. 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: (Kremmydas dimitrios). General contact details of provider: http://edirc.repec.org/data/daauagr.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.