How laboratory experiments could help disentangle the influences of production risk and risk preferences on input decisions

Douadia Bougherara and Celine Nauges

No 18-903, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: The purpose of this article is to further our understanding of input choices (such as pesticides or fertilisers) when producers face production risk that depends on a random shock and on the quantity of input used. Using laboratory experiments, we study the role of risk preferences and public policies (here, a lump-sum subsidy and insurance) on producers’ input decisions in two situations: i) a risk-decreasing input; and ii) a risk-increasing input. Our findings raise questions on the sensitivity of optimal input choices to risk preferences and the relevance of the expected utility model to describe farmers’ decisions.

Keywords: laboratory experiment; input choice; production risk; risk preferences; subsidy; insurance (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-ias, nep-rmg and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.tse-fr.eu/sites/default/files/TSE/docu ... /2018/wp_tse_903.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:32566

Access Statistics for this paper

More papers in TSE Working Papers from Toulouse School of Economics (TSE) Contact information at EDIRC.
Bibliographic data for series maintained by ().