Choice of utility function form: its effect on classification of risk preferences and the prediction of farmer decisions

In applications of expected utility analysis, researchers are confronted with a choice among several utility functional forms. Subjective utility values and probability distributions for price and yield were elicited from Sri Lankan producers of minor export crops. Exponential quadratic and cubic utility functions were estimated. The choice of functional form was found to affect both the classification of risk attitudes and the prediction of harvesting strategy. The exponential function was the best predictor of harvesting strategy because it was the best predictor of mature harvesting. All three functions were equally poor predictors of premature harvesting.


Issue Date:
1992-04
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/172858
PURL Identifier:
http://purl.umn.edu/172858
Published in:
Agricultural Economics: The Journal of the International Association of Agricultural Economists, Volume 06, Issue 4
Page range:
333-344
Total Pages:
12




 Record created 2017-04-01, last modified 2018-01-22

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