Stochastic Production and Heterogeneous Risk Preferences: Commercial Fishers' Gear Choices

Håkan Eggert and Ragnar Tveteras

American Journal of Agricultural Economics, 2004, vol. 86, issue 1, 199-212

Abstract: We present a model of fishers' gear choice, which allows for heterogeneity both in production technology and risk preferences and apply it on a panel of Swedish trawlers. Stochastic revenue functions are estimated and used to predict the mean and standard deviation of revenue for each trip. In a random‐parameters logit model, we test if these predicted values explain gear choice. A majority of fishers respond positively to increased mean and negatively to increased variability of expected landing values, indicating risk aversion, but also show a strong tendency to choose the same gear used on the previous trip.

Date: 2004
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https://doi.org/10.1111/j.1467-8276.2004.tb18466.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:ajagec:v:86:y:2004:i:1:p:199-212

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