A structural estimation of French farmers’ risk preferences: an artefactual field experiment

Douadia Bougherara, Xavier Gassmann and Laurent Piet ()

No 11-06, Working Papers SMART from INRAE UMR SMART

Abstract: We designed an artefactual field experiment involving real payments to elicit French farmers’ risk preferences. We test for two descriptions of farmers’ behaviour: expected utility and cumulative prospect theory and for preference stability across context (price risk and yield risk). We use multiple price lists where farmers make series of choices between two lotteries with varying probabilities and outcomes in the gain and loss domains. We estimate parameters describing farmers’ risk preferences derived from structural models. We find farmers are slightly risk averse in the expected utility framework. In the cumulative prospect theory frame, we find farmers display either loss aversion or probability weighting, tending to overweight small probabilities and to underweight high probabilities. We also estimate the reference point and find it not significantly different from zero. Cumulative prospect theory is a better description of farmers’ risk attitudes. We find risk preferences vary across context.

Keywords: risk attitudes; field experiment; farmer (search for similar items in EconPapers)
JEL-codes: C93 D81 Q10 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2011
New Economics Papers: this item is included in nep-agr, nep-cbe, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: A structural estimation of French farmers’ risk preferences: an artefactual field experiment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:rae:wpaper:201106

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