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Information and Opportunistic Behavior in Federal Crop Insurance Programs

Author

Listed:
  • Cory G. Walters
  • C. Richard Shumway
  • Hayley H. Chouinard
  • Philip R. Wandschneider

    (School of Economic Sciences, Washington State University)

Abstract

Opportunistic behavior in crop insurance can arise due to asymmetric information between producers and the Federal Crop Insurance Corporation. Producers who insure fields using transitional yields based on county average yields or who select options such as buy-up coverage or revenue insurance may increase their return from crop insurance. Using field-level crop insurance contract data for several crops in five growing regions, we find evidence that producers can profit from using buy-up coverage, revenue insurance, and transitional yields and that the level of producer opportunism is crop but not necessarily land-quality specific and is greater due to premium subsidization.

Suggested Citation

  • Cory G. Walters & C. Richard Shumway & Hayley H. Chouinard & Philip R. Wandschneider, 2008. "Information and Opportunistic Behavior in Federal Crop Insurance Programs," Working Papers 2008-9, School of Economic Sciences, Washington State University.
    • Handle: RePEc:wsu:wpaper:shumway-7
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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/Shumway/CropInsurance_1-23-08_.pdf
    File Function: First version, 2008
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    References listed on IDEAS

    as
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    5. Makki, Shiva S. & Somwaru, Agapi, 2001. "Asymmetric Information in the Market for Yield and Revenue Insurance Products," Technical Bulletins 33587, United States Department of Agriculture, Economic Research Service.
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    11. Alan P. Ker, 2001. "Private Insurance Company Involvement in the U.S. Crop Insurance Program," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 49(4), pages 557-566, December.
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    Cited by:

    1. Tajudeen Olalekan Yusuf, 2011. "Brokers' incentives and conflicts of interest in the control of opportunism," Journal of Risk Finance, Emerald Group Publishing, vol. 12(3), pages 168-181, May.
    2. Valentina Neganova & Aleksey Dudnik, 2018. "Improving the State Support of Agriculture in a Region," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 651-662.

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    More about this item

    Keywords

    opportunistic behavior; crop insurance; buy-up; revenue; transitional yields;
    All these keywords.

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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