A note on European farmers' preferences under cumulative prospect theory |
| |
Authors: | Robert Finger Viviana Garcia Chloe McCallum Jens Rommel |
| |
Affiliation: | 1. ETH Zürich, Agricultural Economics and Policy Group, Zurich, Switzerland;2. Department of Economics, Swedish University of Agricultural Sciences, Uppsala, Sweden |
| |
Abstract: | Explaining farmer decision making using cumulative prospect theory is of increasing importance. We present a systematic review on European farmers' preferences under the cumulative prospect theory framework. We identified 17 studies covering 2324 farmers from 12 European countries. All studies report that (on average) farmers are: (i) risk averse, (ii) loss averse, and (iii) overweight small probabilities and underweight large probabilities. However, there is a large heterogeneity across and within studies. These findings have implications for the analysis and design of policy and insurance. |
| |
Keywords: | farmer preferences prospect theory risk & uncertainty risk management |
|
|