SPECIFICATION OF BERNOULLIAN UTILITY FUNCTION IN DECISION ANALYSIS
William W. Lin and
Hui S. Chang
Journal of Agricultural Economics Research, 1978, vol. 30, issue 1, 7
The authors propose two general functional forms, and apply them to the specification of utility functions for predicting farmers' production response. The polynomial utility functions were rejected, based on the result~ of a likelihood-ratio test. The appropriate degree of nonlinearity of the utility function can best be determined by using the general functional forms without a priori specification. Further, farmers' utility functions may exhibit a decreasing absolute risk aversion. The tendency for the Bernoullian utility maximization hypothesis to predict more risky behavior than that actually observed may have been partly due to incorrect specification of the utility function.
Keywords: Agricultural and Food Policy; Research Methods/ Statistical Methods (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ags:uersja:148094
Access Statistics for this article
More articles in Journal of Agricultural Economics Research from United States Department of Agriculture, Economic Research Service Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().