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Please use this identifier to cite or link to this item: http://purl.umn.edu/119534

Title: How Much Can We Learn About Producers' Utility Functions from Their Production Data?
Authors: Lence, Sergio H.
Keywords: expected utility
risk preferences
production analysis
risk attitudes
JEL Codes: C13
D24
D81
Q12
Issue Date: 2008
Abstract: A thought experiment is designed to investigate 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 from agricultural production data. 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 slightly worsen technology parameter estimates. Results also indicate that even under a restricted utility specification, utility parameter estimates are biased. Further, their quality is much worse when shocks are not large or samples are small.
URI: http://purl.umn.edu/119534
Institution/Association: Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition >Proceedings: 2008 Agricultural and Rural Finance Markets in Transition, September 25-26, 2008, Kansas City, Missouri
Total Pages: 44
Collections:Proceedings: 2008 Agricultural and Rural Finance Markets in Transition, September 25-26, 2008, Kansas City, Missouri

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