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Analysing farmers' use of price hedging instruments: an experimental approach

  • Anastassiadis, Friederieke
  • Feil, Jan-Henning
  • Musshoff, Oliver
  • Schilling, Philipp

This paper analyses the influencing factors of farmers' use of price hedging instruments (PHIs) based upon a discrete choice experiment with German grain farmers. A mixed logit model is used to determine whether farmers' choices of PHIs against cash sales are influenced by their price expectation, their risk attitude and their available storage capacities. The results show that farmers with a price expectation below the actual price level have a higher preference for using PHIs against cash sales in general and that the individual degree of risk aversion can have a significant impact on farmers' choices of a specific PHI. A generally lower preference of farmers with available storage capacities for using PHIs as assumed in many theoretical contributions in the literature, however, cannot be confirmed.

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Paper provided by Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE) in its series DARE Discussion Papers with number 1306.

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Date of creation: 2013
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Handle: RePEc:zbw:daredp:1306
Contact details of provider: Postal: Platz der Göttinger Sieben 5, D-37073 Göttingen
Web page: http://www.uni-goettingen.de/en/18500.html

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  1. Kuhberger, Anton & Schulte-Mecklenbeck, Michael & Perner, Josef, 2002. "Framing decisions: Hypothetical and real," Organizational Behavior and Human Decision Processes, Elsevier, vol. 89(2), pages 1162-1175, November.
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