A note on European farmers' preferences under cumulative prospect theory

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

SLU Authors

• Rommel, Jens

  • Department of Economics, Swedish University of Agricultural Sciences
    

Associated SLU-program

SLUsystematic

Global goals (SDG)

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