SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Lence, Sergio H..

The present study sets up a thought experiment calibrated to represent risks of a high-risk production activity (farming), and investigating whether the structure of risk aversion (i.e., the changes in absolute or relative risk aversion associated with changes in wealth) can be estimated with reasonable precision. Findings strongly suggest that typical production data are unlikely to allow identification of the structure of risk aversion. A flexible utility parameterization is found to worsen technology parameter estimates. Findings also indicate that even under a restricted utility specification, the quality of utility parameters estimated from small samples is very poor.

Health Benefits and Uncertainty: An Experimental Analysis of the Effects of Risk Presentation on Auction Bids for a Healthful Product

Palavras-chave: Expected utility; Risk preferences; Production analysis; Risk attitudes.; Risk and Uncertainty; C13; D24; D81; Q12..

Ano: 2007

URL: http://purl.umn.edu/9980

Shaw, W. Douglass; Nayga, Rodolfo M., Jr.; Silva, Andres.

Experimental subjects receive a different presentation of a food product's potential health risk reductions if people habitually eat it, and then asked to bid for the product. Results suggest that the bids vary across the groups that receive differing risk information.

Learning by Doing, Risk Aversion and Use of Risk Management Strategies

Palavras-chave: Health risks; Experimental economics; Auctions; Uncertainty; Risk and Uncertainty; D81; I12.

Ano: 2005

URL: http://purl.umn.edu/23961

Uematsu, Hiroki; Ashok, Mishra K..

Using a national survey, double hurdle models are estimated to examine the impact of farmers’ risk attitude on use of production and marketing contracts. Risk averse farmers are less likely to use contracts but risk attitude does not have any significant impact on the intensity at which contracts are adopted.

On the Economics of Rational Self-Medication

Palavras-chave: Risk attitude; Double hurdle model; Production contracts; Marketing contracts; Agribusiness; Crop Production/Industries; Farm Management; Livestock Production/Industries; Marketing; Risk and Uncertainty; Q10; Q13; D81.

Ano: 2011

URL: http://purl.umn.edu/103851

Akpalu, Wisdom.

It has been established in the medical literature that self-medicating with imperfect information about either the use of a genuine or counterfeit drug or based on wrong self-diagnosis of ailment, which is predominant especially in developing countries, is a risky investment in health capital. This paper models the decision to self-medicate and the demand for self-medicated drugs. We suppose that investment in self-medication depends on the perception of its effectiveness. The results obtained show that the decision to self-medicate depends on the relative price and perceived effectiveness of self-medication, the elasticity of the shadow value of health with respect to the quantity of health capital, and the relative effectiveness of self-medication in...

Optimal Conservation Policy Under Imperfect Intergenerational Altruism

Palavras-chave: Health Production; Self-Medication; Risky Investment; Government Policy; Dynamic Analysis; Demand and Price Analysis; Health Economics and Policy; Institutional and Behavioral Economics; Risk and Uncertainty; I12; I18; D81; C61.

Ano: 2008

URL: http://purl.umn.edu/6363

Mixed Tournaments, Common Shocks, and Disincentives: An Experimental Study

Di Corato, Luca.

In this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.

Tipo: Working Paper

Palavras-chave: Imperfect Altruism; Real Options; Hyperbolic Discounting; Time Inconsistency; Natural Resources Management; Research Methods/ Statistical Methods; D81; C70; Q23; Q58.

Ano: 2011

URL: http://purl.umn.edu/120022

Wu, Steven Y.; Roe, Brian E.; Sporleder, Thomas L..

Two well-known hypotheses from the literature on tournaments are that (1) tournaments can filter out common shocks thereby reducing agents risk exposure; and (2) disincentive effects can arise when a tournament scheme is administered on a group of mixed ability agents. While handicapping and/or the creation of homogeneous groups have been suggested as mechanisms for mitigating disincentive effects, it is often impractical to use handicapping schemes and nearly impossible to create a completely homogeneous labor force. Hence, contract administrators who intend to use tournaments to elicit effort must be able to assess the positive effects of tournaments (eliminate common shocks) against the negative effects (disincentive effects). Using economic...

Exchange Rate Uncertainty and Labour Market Adjustment under Fixed and Flexible Exchange Rates

Palavras-chave: Mixed tournaments; Incentives; Relative performance contracts; Experimental economics; Research Methods/ Statistical Methods; C91 D01; D81; D82; D86.

Ano: 2007

URL: http://purl.umn.edu/9703

Chen, Yu-Fu; Funke, Michael.

The standard literature on working time has modelled the decisions of firms in a deterministic framework in which firms can choose between employment and overtime (given mandated standard hours). Contrary to this approach, we follow the real options approach, which allows us to investigate the value to a firm of waiting to adjust labour when the firm´s revenues in domestic currency are stochastic and adjustment costs are sunk. The simulations reject the null hypothesis that all exchange rate regimes obey common employment adjustment thresholds.

Option Value, Policy Uncertainty, and the Foreign Direct Investment Decision

Palavras-chave: Real Option Theory; Uncertainty; Working Time; Employment; Labour Demand; Exchange Rates; Financial Economics; Labor and Human Capital; D81; E24; J23; F31.

Ano: 2002

URL: http://purl.umn.edu/26287

Chen, Yu-Fu; Funke, Michael.

In this paper we analyse the impact of policy uncertainty on foreign direct investment strategies. The paper follows the real options approach, which allows to investigate the value to a firm of waiting to invest and/or disinvest, when payoffs are stochastic due to political uncertainty and investments are partially reversible. Across the board we find that political uncertainty can be very detrimental to FDI decisions.

Discounting and confidence

Palavras-chave: Real options; Investment; Foreign Direct Investment; Political Uncertainty; International Relations/Trade; D81; D92; E22; F21.

Ano: 2003

URL: http://purl.umn.edu/26373

Grain Contracting Strategies to Induce Delivery and Performance in Volatile Markets

Traeger, Christian P..

Revision of CUDARE Working Paper 1117 issued June 2011

Tipo: Working Paper

Palavras-chave: Uncertainty; Discounting; Climate change; Ambiguity; Confidence; Subjective beliefs; Prudence; Pessimism; Expected utility; Intertemporal substitutability; Intertemporal risk aversion; Risk and Uncertainty; D61; Q54; D81; D90.

Ano: 2011

URL: http://purl.umn.edu/120418

Wilson, William W.; Dahl, Bruce L..

One of the impacts of higher prices along with greater volatility in futures and basis is that there is pressure for an escalation in cash contracting for grain. This volatility has resulted in an unprecedented level of contracting with growers in recent years. There is a wide array of cash contracts with varying terms. There is also a growing realization of growers not delivering on contracts, in part due to escalation in postcontract prices. These are evolving as major strategic issues for buyers and the marketing system, particularly as buyers seek to use such contracting strategies as an element of risk mitigation. There are three purposes of this article. First is to provide a broad survey of contract terms used in grain contracting with growers....

Tipo: Journal Article

Palavras-chave: Grain contracting; Risk; Volatility; Agribusiness; Crop Production/Industries; Farm Management; Production Economics; Risk and Uncertainty; C15; D81; Q12.

Ano: 2009

URL: http://purl.umn.edu/53082

Advanced Biofuel Production in Louisiana Sugar Mills: an Application of Real Options Analysis

Darby, Paul M.; Mark, Tyler B.; Detre, Joshua D.; Salassi, Michael E..

In order to more fully study the risks and uncertainty involved in cellulosic ethanol production, we examine a simulated plant in South Louisiana using Real Options Analysis

Production risk and farm technology adoption in the rain-fed semi-arid lands of Kenya

Palavras-chave: Real options; Risk; Uncertainty; Cellulosic ethanol; Energy cane; Sorghum; Bagasse; Simulation; Agribusiness; Agricultural Finance; Production Economics; Resource /Energy Economics and Policy; Risk and Uncertainty; Q42; Q14; Q16; D81; G31.

Ano: 2011

URL: http://purl.umn.edu/103747

Ogada, Maurice Juma; Nyangena, Wilfred; Yesuf, Mahmud.

This study provides empirical evidence on the effects of production risk on smallholder farmers’ adoption of farm technology, using plot-level data collected from two semi-arid districts in Kenya, Machakos and Taita Taveta. Using Mundlak’s approach (1978), the study found that factors such as yield variability and the risk of crop failures indeed affect technology adoption decisions in low-income, rainfed agriculture. However, the direction and magnitude of effects depend on the farm technology under consideration. The results explain why poor farm households in rainfed and risky production environments are reluctant to adopt new farm technologies that could improve production: it is because the technologies involve enormous downside risks. This result...

Tipo: Journal Article

Palavras-chave: Farm productivity; Production risk; Farm technology adoption; Kenya; Farm Management; International Development; Research and Development/Tech Change/Emerging Technologies; D81; Q12; Q18.

Ano: 2010

URL: http://purl.umn.edu/93865

Cost Analysis of Alternative Harvest and Storage Methods for Switchgrass in the Southeastern U.S.

Larson, James A.; Mooney, Daniel F.; English, Burton C.; Tyler, Donald D..

This study evaluated the potential impacts of dry matter losses from alternative harvest and storage methods on the costs of growing switchgrass for energy production. Data from a switchgrass bale harvest and storage experiment at Milan, TN, indicate that storage losses for covered rectangular bales were greater than for covered round bales. In addition, the cost of delivered feedstock increased with longer storage times because of larger dry matter losses. Even though storage losses were higher with uncovered large round bales, production costs were the lowest because costs of storage were minimal compared to other storage methods.

Determinants of the Strength of Strategic Adjustments in Farm Capital Structure

Palavras-chave: Bioenergy; Dry matter loss; Storage; Production Economics; D20; D21; D81; D86; Q13; Q42; P42.

Ano: 2010

URL: http://purl.umn.edu/56518

Escalante, Cesar L.; Barry, Peter J..

This study employs correlation relationships to measure the strength of trade-offs between business and financial risks as a representative of the strategic capital adjustment process. Under different business risk measures based on varying lengths of historical farm income data, results suggest that farmers tend to adopt a myopic perspective when contemplating risk-balancing plans. Cross-sectional regression results for two-time period models covering the decade of the 1980s and 1990s yielded important implications. The liquidity-constrained environment of the 1980s emphasizes the combination of risk-balancing plans, specialization, and market revenue-enhancing strategies. In the 1990s, risk balancing becomes compatible with risk-reducing crop...

Tipo: Journal Article

Palavras-chave: Business risk; Correlation coefficient measure of risk balancing; Expected utility mean variance model; Financial risk; Risk management strategy; Stochastic interest rates; Strategic capital adjustment; D21; D81; G11; Q12; Q14.

Ano: 2003

URL: http://purl.umn.edu/37834

Análise de arranjos para extração de óleos vegetais e suprimento de usina de biodiesel

Sartori, Marco Antonio; Perez, Ronaldo; da Silva Junior, Aziz Galvao; Machado, Silvia Regina Sartori; Santos, Manoela Maciel de Souza; Miranda, Carlos Alberto de Castro.

This study aimed at the technical-economical evaluation of implanting some vegetal-oil extraction units in order to insert the family agriculture into bio-diesel production chain. Three project models (arrangements) for vegetal-oil extraction units at different sizes were proposed, using extraction by pressing and mixed extraction (extracting by either pressing or solvent) and different raw materials (castor-oil and soybean). For the size analysis, the oil production scales between 50/60 tons/day were used with real market data concerning investments, inputs prices of the process, raw materials and vegetal oil. For the economic analyses, the software BioSoft was used. The BioSoft is a program for supporting the decision-making process, which was developed...

Tipo: Journal Article

Palavras-chave: Vegetal oil; Extraction; Viability; Crop Production/Industries; L25; D81; L69..

Ano: 2009

URL: http://purl.umn.edu/60807

Farm Income Variability and the Supply of Off-Farm Labor by Limited-Resource Farmers

Vergara, Oscar; Coble, Keith H.; Patrick, George F.; Knight, Thomas O.; Baquet, Alan E..

We study the relationship between the off-farm labor decision and the limited-resource farmers’ and spouses’ off-farm experience, education, and sources of income. We found that farmers’ and spouses’ off-farm experience and wages are significant factors in explaining the off-farm labor supply decision. Contrary to expectations, farm income variability is not significant in the farmers’ and spouses’ decision to see off-farm work. The off-farm labor supply of farmers and their spouses is negatively correlated with income transfers from the government. It was also found that the spouse is a residual supplier of on-farm and off-farm labor.

Tipo: Journal Article

Palavras-chave: Farm income variability; Limited-resource farmer; Off-farm work; Tobit regression; C34; D19; D81; J15; Q18.

Ano: 2004

URL: http://purl.umn.edu/43394

Quality Ambiguity and the Market Mechanism for Credence Goods

Benner, Dietrich.

With credence goods consumers cannot judge actual quality neither before purchase (ex ante) nor after purchase (ex post). Trust has to replace own examination and verification. Applying Choquet-Expected Utility theory, ageneral model of credence goods is developed wich takes the problem of trust explicitly in its view and generalizes the problem of quality uncertainty on the 'market for lemmons' of Akerlof (1970) to 'quality ambiguity' with credence goods. The model shows the market mechanism only performing well in providing credence goods when consumers' trust in given information is not too low. With trust too low, sellers of credence good will be driven out of the market by trust induced adverse selection. In market equilibrium prices will always be...

Mitigating Cotton Revenue Risk Through Irrigation, Insurance, and Hedging

Palavras-chave: Credence goods; Asymmetric information; Quality ambiguity; Quality uncertainty; Adverse selection; Ambiguity; Choquet expected utility; Agricultural and Food Policy; Marketing; C72; D81; D82.

Ano: 2004

URL: http://purl.umn.edu/98639

Barham, E. Hart Bise; Robinson, John R.C.; Richardson, James W.; Rister, M. Edward.

This study focuses on managing cotton production and marketing risks using combinations of irrigation levels, put options (as price insurance), and crop insurance. Stochastic cotton yields and prices are used to simulate a whole-farm financial statement for a 1,000 acre furrow irrigated cotton farm in the Texas Lower Rio Grande Valley under 16 combinations of risk management strategies. Analyses for risk-averse decision makers indicate that multiple irrigations are preferred. The benefits to purchasing put options increase with yields, as they are more beneficial when higher yields are expected from applying more irrigation applications. Crop insurance is strongly preferred at lower irrigation levels.

Tipo: Journal Article

Palavras-chave: Cotton; Crop insurance; Irrigation; Options; Puts; Risk; Simulation; Stochastic efficiency with respect to a function; Farm Management; Risk and Uncertainty; D81; Q12; Q15.

Ano: 2011

URL: http://purl.umn.edu/117946

Ethanol Plant Investment using Net Present Value and Real Options Analyses

Schmit, Todd M.; Luo, Jianchuan; Tauer, Loren W..

A real option analysis of dry-grind corn ethanol plants compared to a standard net present value analysis (NPV) shows that the option values increase entry prices and lower exit prices of investment and disinvestment considerably. For a large plant, the gross margin of ethanol price over the corn price for a gallon of ethanol using NPV shows that entry will occur with a $0.45 margin and shutdown will occur at a $0.38. Under a real options framework, the margins for entry and exit become $1.33 and $0.13, respectively. Under baseline conditions, a large operating plant would become mothballed at $0.18 and reactivate if margins rebounded to $0.66. Growth in the variability of ethanol margins will delay new plant investments, as well as exits of currently...

Economic Efficiency Adjusted for Risk Preferences

Palavras-chave: Ethanol; Net Present Value; Real Options Analyses; Environmental Economics and Policy; Financial Economics; Production Economics; Resource /Energy Economics and Policy; D21; D81; Q4.

Ano: 2008

URL: http://purl.umn.edu/51145