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Research article2024Peer reviewedOpen access

A note on European farmers' preferences under cumulative prospect theory

Finger, Robert; Garcia, Viviana; Mccallum, Chloe; Rommel, Jens

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 and uncertainty; risk management

Published in

Journal of Agricultural Economics
2024, Volume: 75, number: 1, pages: 465-472 Publisher: WILEY

    Associated SLU-program

    SLUsystematic

    Sustainable Development Goals

    SDG2 Zero hunger
    SDG15 Life on land

    UKÄ Subject classification

    Economics
    Business Administration

    Publication identifier

    DOI: https://doi.org/10.1111/1477-9552.12565

    Permanent link to this page (URI)

    https://res.slu.se/id/publ/126658