Using measurement of risk attitude in modeling farmer's technology choices

The paper comprises a description of the use of some experimental measurements of risk attitudes of rural households in semi-arid tropical India in a modeling study of technology choice by farmers. A quadratic risk programming approach which has merit in modeling farmers` decision making in high risk, mixed cropping situations in SAT India and which can be specified in a whole-farm context requires consideration of farmers` risk attitude. Values of absolted risk aversion as defined by Pratt are derived from the estimates of partial risk aversion coefficients which were estimated by Binswanger by doing a relatively large-scale study of risk attitudes of rural households. The derivation has allowed us to establish relationship between absolute risk aversion coefficient and net income of farm plan. On the scant of evidence that we have obtained in the paper, the merit of the approach used for deriving absolute risk aversion coefficients may be regarded as `not yet proven`. There is need to accumulate more results comparing computed farm plans with actual at various levels of risk aversion and for a variety of locations. [AS]

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Andhra Pradesh: ICRISAT
15, iiip.
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ICRISAT Economics Program Progress Report 60
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 Record created 2017-10-01, last modified 2017-10-01

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