scholarly journals Risk and Site Factors Affecting Potential Nitrogen Delivery in the Virginia Coastal Plain

2001 ◽  
Vol 33 (1) ◽  
pp. 173-188 ◽  
Author(s):  
Wei Peng ◽  
Darrell J. Bosch
Keyword(s):  
Surface Water ◽  
Risk Aversion ◽  
Coastal Plain ◽  
Stochastic Dominance ◽  
Risk Attitudes ◽  
Risk Averse ◽  
Site Factors ◽  
Factors Affecting ◽  
Fertilizer Recommendations ◽  
Different Levels

AbstractThe effects of cropland slope, distance to surface water, farmers' risk attitudes, and farmers' nitrogen (N) fertilizer applications on potential N delivery to streams and costs of reducing N delivery were evaluated for a representative Virginia peanut-cotton farm. Target MOTAD and generalized stochastic dominance were used to select preferred plans for different levels of risk aversion. Costs of reducing N delivery were lower on farms where fields were located close to surface water, where N was overapplied relative to extension fertilizer recommendations, and where the operator was risk averse. Cropland slope had less effect on cost of reducing N delivery relative to other factors.

scholarly journals FALSE CONSCIOUSNESS IN FINANCIAL MARKETS: OR IS IT IN IVORY TOWERS?

2013 ◽  
Vol 4 (1) ◽  
pp. 19-30
Author(s):  
Adi Schnytzer ◽  
Sara Westreich
Keyword(s):  
Risk Aversion ◽  
Financial Markets ◽  
Risk Index ◽  
Recent Model ◽  
Economic Index ◽  
Expected Returns ◽  
False Consciousness ◽  
Risk Averse ◽  
Different Levels ◽  
Negative Expectations

In general, models in finance assume that investors are risk averse. An example of such a recent model is the pioneering work of Aumann and Serrano, which presents an economic index of riskiness of gambles which is independent of wealth and holds (as might be understood from the adjective “economic”) for exclusively risk averse investors. In their paper, they discuss gambles with positive expected returns which will be accepted or rejected by agents which different levels of risk aversion. The question never asked by the authors (and in most of the finance literature) is: Who is offering these attractive gambles? To arrive at an answer, we extend the Aumann-Serrano risk index in such a way that it accommodates gambles with either positive or negative expectations and is thus suitable for both the risk averse and risk lovers.  Once we allow for the existence of risk lovers, it may be shown that in financial markets, many gambles with negative expectations are taken either knowingly or unknowingly so that there are always people that act as if they are risk lovers. The paper concludes with a brief discussion of the implications of our result, in particular that gambling is by no means restricted to the casino or the track.

Fractional Degree Stochastic Dominance

2020 ◽  
Vol 66 (10) ◽  
pp. 4630-4647 ◽  
Author(s):  
Rachel J. Huang ◽  
Larry Y. Tzeng ◽  
Lin Zhao
Keyword(s):  
Lower Bound ◽  
Risk Aversion ◽  
Stochastic Dominance ◽  
Absolute Risk ◽  
Comparative Statics ◽  
Risk Averse ◽  
Absolute Risk Aversion ◽  
Risk Apportionment ◽  
Lottery Choices ◽  
Increase In Risk

We develop a continuum of stochastic dominance rules for expected utility maximizers. The new rules encompass the traditional integer-degree stochastic dominance; between adjacent integer degrees, they formulate the consensus of individuals whose absolute risk aversion at the corresponding integer degree has a negative lower bound. By extending the concept of “uniform risk aversion” previously proposed in the literature to high-order risk preferences, we interpret the fractionalized degree parameter as a benchmark individual relative to whom all considered individuals are uniformly no less risk averse in the lottery choices. The equivalent distribution conditions for the new rules are provided, and the fractional degree “increase in risk” is defined. We generalize the previously defined notion of “risk apportionment” and demonstrate its usefulness in characterizing comparative statics of risk changes in fractional degrees. This paper was accepted by David Simchi-Levi, decision analysis.

The Determinants of Risk Aversion: The Role of Intergenerational Transmission

2013 ◽  
Vol 14 (2) ◽  
pp. 214-234 ◽  
Author(s):  
Maria De Paola
Keyword(s):  
Risk Aversion ◽  
Intergenerational Transmission ◽  
Individual Characteristics ◽  
Risk Attitudes ◽  
Risk Averse ◽  
The Public ◽  
Measures Of Risk ◽  
High Ability Students ◽  
The Relationship

AbstractThis article studies the relationship between risk attitudes and individual characteristics focusing on the intergenerational transmission of risk preferences. We use a dataset of a sample of Italyn students which allows us to build different measures of risk aversion based, respectively, on a survey asking students about their willingness to invest in a risky asset and about their preferences for job security and on the results of an entry test using explicit penalty points in the case of incorrect answers. In line with the findings highlighted by the existing literature, we find that women are more risk averse than men, more patient subjects are more risk averse, while high-ability students are less risk averse. As far as intergenerational transmission of preferences is concerned, it emerges that students whose fathers are entrepreneurs have a higher propensity to take risks, while students whose fathers are employed in the public sector are more risk averse. Only fathers matter with regards to their children’s risk attitudes. These results are robust to different measures of risk aversion and to different specifications of our model.

scholarly journals Crowded out: Heterogeneity in risk attitudes among poor households in the US

2021 ◽  
Author(s):  
Arianna Galliera ◽  
E. Elisabet Rutström
Keyword(s):  
Risk Aversion ◽  
Field Experiments ◽  
Household Head ◽  
Negative Relationship ◽  
Household Size ◽  
Household Composition ◽  
Risk Attitudes ◽  
Risk Averse ◽  
Data Set ◽  
Poor Households

AbstractNot much is known about the heterogeneity of risk attitudes among poor households in rich countries. This paper provides estimates from a unique data set collected among the urban poor in Atlanta, Georgia. The data set includes lab-in-the-field experiments on the relationship between risk attitudes and several household characteristics. Apart from looking at income, wealth, and education, we are particularly interested in household composition as it captures the number and kind of people who are dependant on the income of the household head. Heads of households who are less risk averse may be willing to take on the extra risk from smaller resource margins resulting from additional dependants, implying a negative relationship between household size and risk aversion. However, if the size of the household is a result of exogenous forces some heads of households may become more risk averse with more dependants. Household size can also reflect a risk management choice that involves adding non-dependant members who can provide resources and risk sharing. However, this possibility is limited to homes that are not already too crowded. We find that household size correlates positively with the risk aversion of the head, but with a large proportion of children the correlation is strongly dampened. However, this negative effect of children is conditional on the home not already being crowded. These heterogeneous findings have implications for the design of new insurance, savings, and credit programs where risk attitudes are important to the decisions to adopt.

Pesticide Use and Risk Aversion in the French Wine Sector

2018 ◽  
Vol 13 (4) ◽  
pp. 451-460 ◽  
Author(s):  
Joël Aka ◽  
Adeline Alonso Ugaglia ◽  
Jean-Marie Lescot
Keyword(s):  
Risk Aversion ◽  
Maximum Yield ◽  
The Other ◽  
Risk Attitudes ◽  
Pesticide Use ◽  
Risk Averse ◽  
Network Database ◽  
Farm Accountancy Data Network ◽  
Wine Sector ◽  
Jel Classifications

AbstractThis paper studies the risk attitudes of winegrowers in France. In French viticulture, most of the production is done under an appellation regime that constrains maximum authorized yields. We consider a trans-log cost function under the constraint of this maximum yield and estimate winegrowers' attitudes to risk. Our estimates are based on the European Farm Accountancy Data Network database (2005–2014) and data from the French National Institute of Origin and Quality. We find that winegrowers are risk averse. For the majority of winegrowers, risk aversion is declining with expected profit. In the Champagne region, however, where expected profits are far higher than in the other regions, we observe the reverse relation: winegrowers become more risk averse as expected profits rise. (JEL Classifications: C13, C33, O33, Q16).

scholarly journals Why Buy Accident Forgiveness Policies? An Experiment

2018 ◽  
Vol 10 (8) ◽  
pp. 1
Author(s):  
Fan Liu
Keyword(s):  
Decision Making ◽  
Risk Aversion ◽  
Time Preferences ◽  
Purchase Decision ◽  
Risk Attitudes ◽  
Purchase Decisions ◽  
Risk Averse ◽  
Product Price ◽  
High Degree

Risk and time preferences influence the insurance purchase decisions under uncertainty. Accident forgiveness, often considered as “premium insurance,” protects policyholders against a premium increase in the next period if an at-fault accident occurs. In this paper, by conducting a unique experiment in the controlled laboratory conditions, we examine the role of risk and time preferences in accident forgiveness purchase decisions. We find that individual discount rates and product price significantly affect premium insurance purchase decision. Interestingly, we also find evidence that less risk averse policyholders in general behave more like risk neutral when making insurance decision. Risk attitudes affect insurance decision-making only among those who have relatively high degree of risk aversion.

Eliciting Risk Preferences and Elasticity of Substitution

2020 ◽  
Vol 17 (4) ◽  
pp. 314-329
Author(s):  
Johan Burgaard ◽  
Mogens Steffensen
Keyword(s):  
Risk Aversion ◽  
Discount Rate ◽  
Predictive Power ◽  
Recursive Utility ◽  
Risk Averse ◽  
Indirect Utility ◽  
Consistent Estimation ◽  
On Certainty ◽  
Certainty Equivalents ◽  
Elasticity Of Intertemporal Substitution

Risk aversion and elasticity of intertemporal substitution (EIS) are separated via the celebrated recursive utility building on certainty equivalents of indirect utility. Based on an alternative separation method, we formulate a questionnaire for simultaneous and consistent estimation of risk aversion, subjective discount rate, and EIS. From a representative group of 1,153 respondents, we estimate parameters for these preferences and their variability within the population. Risk aversion and the subjective discount rate are found to be in the orders of 2 and 0, respectively, not diverging far away from results from other studies. Our estimate of EIS in the order of 10 is larger than often reported. Background variables like age and income have little predictive power for the three estimates. Only gender has a significant influence on risk aversion in the usually perceived direction that females are more risk-averse than males. Using individual estimates of preference parameters, we find covariance between preferences toward risk and EIS. We present the background reasoning on objectives, the questionnaire, a statistical analysis of the results, and economic interpretations of these, including relations to the literature.

scholarly journals Market-based instruments for risk-averse farmers: rubber agroforest conservation in Jambi Province, Indonesia

2016 ◽  
Vol 22 (2) ◽  
pp. 133-155 ◽  
Author(s):  
Utkur Djanibekov ◽  
Grace B. Villamor
Keyword(s):  
Income Inequality ◽  
Risk Aversion ◽  
Real Options ◽  
Risk Averse ◽  
Variance Model ◽  
Income Uncertainty ◽  
Real Options Approach ◽  
Pigovian Taxes ◽  
Rubber Agroforest ◽  
Mean Variance

AbstractThis paper investigates the effectiveness of different market-based instruments (MBIs), such as eco-certification premiums, carbon payments, Pigovian taxes and their combination, to address the conversion of agroforests to monoculture systems and subsequent effects on incomes of risk-averse farmers under income uncertainty in Indonesia. For these, the authors develop a farm-level dynamic mean-variance model combined with a real options approach. Findings show that the conservation of agroforest is responsive to the risk-aversion level of farmers: the greater the level of risk aversion, the greater is the conserved area of agroforest. However, for all risk-averse farmers, additional incentives in the form of MBIs are still needed to prevent conversion of agroforest over the years, and only the combination of MBIs can achieve this target. Implementing fixed MBIs also contributes to stabilizing farmers’ incomes and reducing income risks. Consequently, the combined MBIs increase incomes and reduce income inequality between hardly and extremely risk-averse farmers.

scholarly journals OPTIMAL OUTCOME SHARING WITH A CONSORTIUM OF CONTRACTORS

2015 ◽  
Vol 22 (5) ◽  
pp. 655-665 ◽  
Author(s):  
S. Mahdi HOSSEINIAN ◽  
David G. CARMICHAEL
Keyword(s):  
Risk Aversion ◽  
Risk Attitude ◽  
Risk Averse ◽  
Optimal Outcome ◽  
Original Solution ◽  
Project Outcome ◽  
Risk Neutral ◽  
Current Practices

Where a consortium of contractors is involved, there exist no guidelines in the literature on what the outcome sharing arrangement should be. The paper addresses this shortfall. It derives the optimal outcome sharing arrangement for risk-neutral and risk-averse contractors within the consortium, and between the consortium and a risk-neutral owner. Practitioners were engaged in a designed exercise in order to validate the paper’s propositions. The paper demonstrates that, at the optimum: the proportion of outcome sharing among contractors with the same risk-attitude should reflect the levels of their contributions; the proportion of outcome sharing among contractors with the same level of contribu­tion should be lower for contractors with higher levels of risk aversion; a consortium of risk-neutral contractors should receive or bear any favourable or adverse project outcome respectively; and the proportion of outcome sharing to a con­sortium of risk-averse contractors should reduce, and the fixed component of the consortium fee should increase, when the contractors become more risk-averse or the level of the project outcome uncertainty increases. The paper proposes an original solution to the optimal sharing problem in contracts with a consortium of contractors, thereby contributing to current practices in contracts management.

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