UTILITY-EFFICIENT PROGRAMMING FOR WHOLE-FARM PLANNING

A programming technique, utility-efficient programming, is developed for farm planning under risk. The objective function is the parametric sum of two parts of the utility function in which the degree of risk aversion varies systematically with the parameter. This technique has several advantages over those previously available: a number of types of utility functions are applicable including ones exhibiting decreasing risk aversion; the degree of risk aversion can be limited to a plausible range; the form of the distribution for activity net revenues is flexible; and the technique can be used with available algorithms. The method is illustrated using a parametric linear programming algorithm.