A dynamic dual model of investment under uncertainty is applied to a panel of Finnish hog farms. Stochastic dynamic programming is used to characterize duality relations. The model accommodates irreversibility and/or asymmetric adjustment costs. Results have important implications for Finland's...

This paper considers an agricultural production model of sequential nitrogen application under risk. Because of random shocks between successive production stages, optimal fertilization decisions depend on the magnitude of farmers' risk aversion (risk premium), and the possibility for farmers to...

Using 11 years of experimental crop yields by cropping systems and fertilizer level, a MOTAD frontier was developed. This analysis allowed yield, cost, and stability interactions arising from crop sequences to be implicitly included. Target-MOTAD, Safety-First, and undominated stochastic...

This article is the further development and refinement of quarterly models of U.S. field crops, drawing upon the theory of pricing, production, and storage under uncertainty. The decisions of storage industry and farm production are taken into account. The findings of this research are both...

This paper examines the potential for adverse selection when farmers are offered a portfolio of insurance policies. We analyze the risk characteristics farmers who bought alternative insurance instruments in 1996-97. Inability to differentiate farmers according to risk types results in pooling...

The theoretical foundation for risk pooling in insurance has heavily depend on the independence assumption of losses, which is severely violated in crop insurance. A weaker condition, asymptotic nonpositive correlation can also lead to risk pooling and is satisfied by yield losses. Therefore,...

A CVM survey of WTP for water quality was conducted in October 1997. Findings suggest that WTP depends logically on risk perceptions and, thus, on the amount of water quality being purchased. However, erroneous subjective risk opinions were found to bias WTP downward.

This paper analyzes the potential trade offs and complementarities that exist between intra-year strategies employing annual price and yield risk contracts and inter-year self-insurance strategies involving intertemporal consumption substitution and borrowing, and examines whether standard crop...

We hypothesize that imperfect quality measurement in contracts for fresh fruits and vegetables results in a moral-hazard problem, and that the final price of the produce provides additional information regarding quality. As a consequence, growers are not shielded from all price risk. This...

We investigate the objectives of agricultural bank managers and their impacts on bank efficiency. If managers are non-neutral toward risk, then banks may appear inefficient when they are not. We find non-neutrality toward risk and efficiency gains due to firm size, loan shares, asset shares, and...