Evaluation of Farmer’s Risk Attitudes Using Alternative Utility Functional Forms

The most commonly used utility functional forms are reviewed and their properties compared. Then, using data collected from West Azarbaijan province, utility functions are estimated and absolute risk aversion coefficients measured. Exponential and expopower utility functions classified all farmers as risk averse, but quadratic and cubic utility functions classified ۷۵% and ۶۵% of farmers as risk-averse, respectively. Findings in this study indicated that alternative utility functions may classify farmers’ risk attitudes in different ways.

Keywords:

Agricultural economics , Risk attitudes , Utility function