Measuring the effect of risk attitude on marketing behavior |
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Authors: | Jason RV Franken Joost ME Pennings Philip Garcia |
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Institution: | 1. School of Agriculture, Western Illinois University, , Macomb, IL 61455, USA;2. Department of Marketing and Consumer Behavior, Wageningen University, , Hollandseweg 1, 6706 KN Wageningen, The Netherlands;3. Department of Finance and Marketing, Maastricht University, , 6211 LM Maastricht, The Netherlands;4. Department of Agricultural and Consumer Economics, University of Illinois at Urbana‐Champaign, , Urbana, IL 61801, USA |
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Abstract: | Despite extensive study, researchers continue to search for consistent and reliable measures of risk preferences to explain market behavior. We find that a measure, combining experiments rooted in expected utility theory and measures derived from surveys, explains spot and contractual sales, but does not exhibit substantially greater explanatory power than its underlying components. Survey‐based measures are generally more significant indicators of marketing choices, but experimental measures reveal how risk attitudes vary over a range of probable outcomes, which is important in light of increased commodity price volatility. Given recently identified limitations on the applicability of expected utility theory, we suggest that researchers include survey methods to obtain low‐cost supplemental measures. |
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Keywords: | Risk attitude Risk behavior Marketing D03 D81 M31 Q13 |
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