Risk, risk aversion and agricultural technology adoption a combination of real options and stochastic dominance
Wolfgang Britz and
No 277421, 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia from International Association of Agricultural Economists
We propose a novel approach to capture risk and risk aversion for agricultural technology adoption by integrating second order stochastic dominance in a farm-level model based on real options. We employ an illustrative case study of perennial energy crop adoption. In our example, we found that risk aversion leads to smaller and earlier adoption of a new technology; in contrast, higher subjective riskiness increases expected scale and first slow down and then accelerate adoption. Those effects would have been obscured if technology adoption would have been considered as standing-alone or as now-or-never decision. Acknowledgement :
Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae18:277421
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