ASSESSING FARMERS' ATTITUDES TOWARD RISK USING THE "CLOSING-IN" METHOD

The 1996 Farm Bill and low commodity prices have regenerated interest in the impact of risk and farmers' risk attitudes on production agriculture. Previous research has used expected utility theory (EUT) and direct elicitation of utility functions (DEU) for eliciting risk attitudes. To overcome the criticism of EUT and DEU, a recently developed technique called the "closing in" method is adapted for eliciting farmers' risk attitudes. This method is applied to Illinois farmers by using a computerized decision procedure, and is validated by comparing the results to the farmers' self-assessment of their risk attitudes and score to a risk attitudinal scale.