Measuring the effect of risk attitude on marketing behavior

J.R.V. Franken, J.M.E. Pennings, P. Garcia

Research output: Contribution to journalArticleAcademicpeer-review

17 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)525-535
JournalAgricultural Economics
Volume45
Issue number5
DOIs
Publication statusPublished - 2014

Keywords

  • farmers subjective probabilities
  • econometric estimation
  • production contracts
  • northern thailand
  • preference
  • aversion
  • perceptions
  • decisions
  • construct
  • india

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