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RESPONSES TO RISK IN WEED CONTROL DECISIONS UNDER EXPECTED PROFIT MAXIMISATION
Author(s) -
Pannell D. J.
Publication year - 1990
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1990.tb00655.x
Subject(s) - profit (economics) , decision maker , optimal decision , economics , control (management) , weed , optimal control , expected utility hypothesis , weed control , microeconomics , computer science , mathematics , decision tree , agronomy , mathematical optimization , mathematical economics , management science , biology , management , artificial intelligence
Risk is an important characteristic of decisions about weed control in crops. In this paper it is shown that risk can affect weed control decisions even if the objective of the decision maker is to maximise expected profits: that is, even if the decision maker is ‘risk‐neutral’ in the usual economic sense. This is shown for two decision frameworks: the optimal rate approach and the economic threshold approach. Empirical results are presented for control of ryegrass in wheat in Western Australia. It is found that, in general, risk reduces the optimal level of herbicide use under expected profit maximisation. Although individual sources of risk have a small impact on the optimal decision rules, combinations of uncertain variables can have a relatively large effect.