Feedforward Backpropagation Neural Networks in Prediction of Farmer Risk Preferences

An out-of-sample prediction of Kansas farmers' responses to five surveyed questions involving risk is used to compare ordered multinomial logistic regression models with feedforward backpropagation neural network models. Although the logistic models often predict more accurately than the neural network models in a mean-squared error sense, the neural network models are shown to be more accommodating of loss functions associated with a desire to predict certain combinations of categorical responses more accurately than others. Copyright 1996, Oxford University Press.