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Behavioral Responses of Farmers to Risk

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  • Watt, David L.
  • Larson, James A.

Abstract

Optimal control and Monte Carlo simulation are used to measure farmers' risk attitudes. Discounting for the probablistic life expectancy of the firm. then comparing optimal capital structure to the observed. farmers in North Dakota internally rationed capital at a 19vel implying a time preference of money 6.39 percent below the rate expected of a risk neutral participant.

Suggested Citation

  • Watt, David L. & Larson, James A., 1987. "Behavioral Responses of Farmers to Risk," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270124, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea87:270124
    DOI: 10.22004/ag.econ.270124
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    References listed on IDEAS

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    3. Collins, Robert, 1985. "Risk Analysis For Agricultural Production Firms: Concepts, Information Requirements And Policy Issues: A Dynamic Model Of The Debt-Equity Structure Of A Proprietary Firm," Staff Paper Series 302398, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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    5. Unknown, 1985. "Risk Analysis for Agricultural Production Firms: Concepts, Information Requirements and Policy Issues," Staff Paper Series 200899, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. Stephen C. Gabriel & C. B. Baker, 1980. "Concepts of Business and Financial Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 560-564.
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