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Risk, risk aversion and agricultural technology adoption a combination of real options and stochastic dominance

A. Spiegel, Wolfgang Britz and Robert Finger

No 277421, 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia from International Association of Agricultural Economists

Abstract: 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)
New Economics Papers: this item is included in nep-agr and nep-upt
Date: 2018-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae18:277421

DOI: 10.22004/ag.econ.277421

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