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Discontinuous Utility In Agricultural Risk Modeling

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  • Weiss, Michael D.

Abstract

Conditions are developed for the theoretically sound use of discontinuous utility functions to represent behavior under risk. The dangers of spurious use of discontinuous utility in (1) empirical studies and (2) cases in which a riskless asset is available, are highlighted. Related problems in the agricultural economics literature are discussed.

Suggested Citation

  • Weiss, Michael D., 1985. "Discontinuous Utility In Agricultural Risk Modeling," 1985 Annual Meeting, August 4-7, Ames, Iowa 278524, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea85:278524
    DOI: 10.22004/ag.econ.278524
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    References listed on IDEAS

    as
    1. Masson, Robert T, 1974. "Utility Functions with Jump Discontinuities: Some Evidence and Implications from Peasant Agriculture," Economic Inquiry, Western Economic Association International, vol. 12(4), pages 559-566, December.
    2. Hildreth, Clifford & Knowles, Glenn J., 1982. "Some Estimates of Farmers' Utility Functions," Technical Bulletins 54545, University of Minnesota, Agricultural Experiment Station.
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