A model with proportional errors in variables arising naturally in microeconomics is considered. Unlike the classical additive errors case, all OLS parameter estimates exhibit attenuation bias that does not depend on the limiting distribution of the data. The distribution of OLS estimators is...

Risky production functions which are commonly in use are shown to be very restrictive. In particular, such functions cannot describe technologies where inputs marginally reduce risk. A simple production function which avoids these restrictions is posited and alternative estimation procedures are...

A structural inter-temporal model of agricultural asset arbitrage equilibrium is developed and applied to agriculture in the North-Central region of the U.S. The data is consistent with unifying level of risk aversion. The levels of risk aversion are more plausible than previous estimates for...

A firm model of production and hedging decisions is developed using a mean-variance preference function. Comparative static analysis of the model generates a number of testable hypotheses. For example, the influence of price risk, production risk and hedging cost on the optimal level of...

Using panel data, the relationship between income uncertainty and the stock of wealth through precautionary saving is examined. Evidence from Kansas data is consistent with the precautionary saving motive in that farm households facing greater uncertainty in income maintain larger stocks of...

Gorman’s theory of demand is extended comprehensively to incomplete systems. The incomplete systems approach dramatically increases this class of models. The separate roles of symmetry and adding up are identified in the rank and the functional form of this class of models. We show that...