Efficient Portfolios of Market Advisory Services: An Application of Shrinkage Estimators

Silvina M. Cabrini, Scott Irwin and Darrel L. Good

No 19469, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: A Bayesian hierarchical model was employed to estimate individual expected pricing performance for market advisory programs in corn and soybeans. Performance is defined as the difference between the price/revenue obtained by following the program's marketing recommendations and the average price/revenue offered by the market along the marketing window. The estimates obtained from this model are weighted averages of traditional separate and pooled estimates. Based on the sample employed, the most reasonable individual estimates for expected pricing performance imply a substantial shrinkage towards pooled values. The Bayesian estimates for expected pricing performance range from ¢9/bu to ¢9/bu for corn, from ¢11/bu to ¢17/bu for soybeans and $0.4/acre to $11/acre for revenue. Bayesian estimates are employed in the construction of efficient portfolios of advisory programs. Results suggest that farmers can benefit from following the marketing recommendations of advisory programs portfolios.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 46
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19469

DOI: 10.22004/ag.econ.19469

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