Evaluating the risk of a particular decision depends on the risk aversion of the decision maker related to the underlying utility function. The objective of this paper is to use stochastic efficiency with respect to a function (SERF) to compare the ranking of risky alternatives using alternative...

Often analysts must conduct risk analysis based on a small number of observations. This paper describes and illustrates the use of a kernel density estimation procedure to smooth out irregularities in such a sparse data set for simulating univariate and multivariate probability distributions.

To concentrate on treating the most serious risks, methods of business risk management usually seek to identify the main risks and to assess their relative importance. Risks are typically assessed in terms of their chances of occurrence and the severity of their consequences. The assessments may...

A recent paper by Hardaker et al. (The Australian Journal of Agricultural and Resource Economics, 48, 2004a, 253) and book by Hardaker et al. (Coping with Risk in Agriculture, 2004b) describe a procedure for determining an efficient set from among a set of random alternatives. This procedure,...

Defining appropriate probability distributions for the variables in an economic model is an important and often arduous task. This paper evaluates the performance of several common probability distributions under different distributional assumptions when sample sizes are small and there is...

A recent contribution by Meyer et al. (2009, p. 521) corrected an error of fact by Hardaker et al. (2004b, p. 253) about the comparison between stochastic dominance with respect to a function (SDRF) and stochastic efficiency with respect to a function (SERF). While both methods compare risky...

This paper studies what causes (small-scale) farmers to leave their farms and typically move to urban areas. A data set is constructed by linking survey results with financial data, and the data set is analyzed by multivariate statistical techniques. Our results indicate that, while existence...

The concept of stochastic dominance is described and its use is illustrated in relation to the evaluation of the output of a systems simulation model of lucerne haymaking in south-west Spain. Two alternative machinery systems are ranked for various lucerne areas using the criteria of stochastic...

Decision analysis, the practice of Bernoullian decision theory and Bayesian statistics, is reviewed in relation to its application in management. Aspects of the scaling of beliefs (probabilities) and preferences (utilities) are discussed, focussing on practical problems. It is concluded that the...