Premium
On Testing the Structure of Risk Preferences in Agricultural Supply Analysis
Author(s) -
Pope Rulon D.,
Just Richard E.
Publication year - 1991
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242826
Subject(s) - preference , economics , constant (computer programming) , risk aversion (psychology) , econometrics , microeconomics , expected utility hypothesis , mathematical economics , computer science , programming language
Risk preferences broadly affect many economic decisions when markets are incomplete. Common representations of risk preferences are constant absolute, relative, and partial relative risk aversion. Each of these preference classes has distinct impacts on choice. An econometric test for distinguishing the class of preferences is proposed and implemented for potato supply response in Idaho. The data reject constant absolute and partial relative risk aversion and are congruent with constant relative risk aversion.