DIE KEUSE VAN RISIKO-DOELTREFFENDE SPILPUNTBELEGGINGSTRATEGIEE MET BEHULP VAN STOGASTIESE DOMINANSIEKRITERIA

J. A. Meiring and L. K. Oosthuizen

Agrekon, 1990, vol. 29, issue 4

Abstract: Risk-efficient centre pivot investment strategies can be selected by taking into account both cumulative probability distributions of the estimated after-tax income from alternative centre pivot investments and the producer's preferences. Ordinary and generalized stochastic dominance criteria are used as decision-making criteria. Eighteen typical centre pivot systems were identified on the basis of differences in capacity, size, pumping height and soil type. The estimated net present values for a wheat/maize/cotton rotation crop system were calculated for each investment by taking production and price risks into consideration. Stochastic dominance criteria facilitate the selection of the risk-efficient strategies that will be preferred by different decision-makers, on the basis of the total probability distributions of outcomes. In most cases stochastic dominance of the first degree gives a single strategy which is dominant. Only by using the generalized stochastic dominance criterion can investment strategies be placed in order of preference. However, in this case decision-makers with varying degrees of risk-sensitivity do not differ in respect of centre pivot investment strategics that would satisfy their spesific preferences.

Keywords: Agricultural and Food Policy; Financial Economics; Risk and Uncertainty (search for similar items in EconPapers)
Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267326

DOI: 10.22004/ag.econ.267326

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