Agricultural Decision Making in the Argentine Pampas: Modeling the Interaction between Uncertain and Complex Environments and Heterogeneous and Complex Decision Makers

Guillermo Podestá (), Elke U. Weber (), Carlos Laciana (), Federico Bert () and David Letson
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Guillermo Podestá: University of Miami
Elke U. Weber: Columbia University
Carlos Laciana: University of Buenos Aires
Federico Bert: University of Buenos Aires

A chapter in Decision Modeling and Behavior in Complex and Uncertain Environments, 2008, pp 57-76 from Springer

Abstract: Simulated outcomes of agricultural production decisions in the Argentine Pampas were used to examine “optimal” land allocations among different crops identified by maximization of the objective functions associated with expected utility and prospect theories. We propose a more mathematically tractable formulation for the prospect theory value-function maximization, and explore results for a broad parameter space. Optimal actions differ among some objective functions and parameter values, especially for land tenants, whose enterprise allocation is less constrained by rotations. Our results demonstrate in a nonlaboratory decision context that psychologically plausible deviations from EU maximization matter.

Keywords: Risk Aversion; Prospect Theory; Land Tenant; Loss Aversion; Initial Wealth (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spochp:978-0-387-77131-1_3

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DOI: 10.1007/978-0-387-77131-1_3

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