Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India

Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India

We investigate farmers’ decision making under risk by eliciting their willingness to pay for hypothetical risky income distributions. We also investigate whether farmers behave differently to price and yield risk. To do so, we present the risky income distributions as those with constant price and v...

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Main Authors: Thiagu Ranganathan, Sarthak Gaurav, Ashish Singh
Format: Article
Language:English
Published: Elsevier 2018-09-01
Series:IIMB Management Review
Online Access:http://www.sciencedirect.com/science/article/pii/S0970389618302441
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spelling doaj-e727bb3c006243ec875a27381b8438cf2020-11-24T22:23:21ZengElsevierIIMB Management Review0970-38962018-09-01303258269Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, IndiaThiagu Ranganathan0Sarthak Gaurav1Ashish Singh2Economics Area, Indian Institute of Management Nagpur (IIM Nagpur), VNIT Campus, South Ambazari Road, Nagpur, Maharashtra, India; Corresponding author.Shailesh J Mehta School of Management (SJMSOM), Indian Institute of Technology Bombay (IIT Bombay), Powai, Mumbai, Maharashtra, IndiaShailesh J Mehta School of Management (SJMSOM), Indian Institute of Technology Bombay (IIT Bombay), Powai, Mumbai, Maharashtra, IndiaWe investigate farmers’ decision making under risk by eliciting their willingness to pay for hypothetical risky income distributions. We also investigate whether farmers behave differently to price and yield risk. To do so, we present the risky income distributions as those with constant price and variable yield to a set of farmers, and those with constant yield and variable price to another set of farmers. We find that many farmers violate first order stochastic dominance, an assumption central to validity of rational decision making under risk. We also find that farmers who perceive themselves as risk takers are more likely to violate them. Keywords: Decisions under risk, Experiments, Stochastic dominance, Indiahttp://www.sciencedirect.com/science/article/pii/S0970389618302441
collection DOAJ
language English
format Article
sources DOAJ
author Thiagu Ranganathan
Sarthak Gaurav
Ashish Singh
spellingShingle Thiagu Ranganathan
Sarthak Gaurav
Ashish Singh
Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India
IIMB Management Review
author_facet Thiagu Ranganathan
Sarthak Gaurav
Ashish Singh
author_sort Thiagu Ranganathan
title Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India
title_short Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India
title_full Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India
title_fullStr Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India
title_full_unstemmed Anomaly in decision making under risk: Violation of stochastic dominance among farmers in Gujarat, India
title_sort anomaly in decision making under risk: violation of stochastic dominance among farmers in gujarat, india
publisher Elsevier
series IIMB Management Review
issn 0970-3896
publishDate 2018-09-01
description We investigate farmers’ decision making under risk by eliciting their willingness to pay for hypothetical risky income distributions. We also investigate whether farmers behave differently to price and yield risk. To do so, we present the risky income distributions as those with constant price and variable yield to a set of farmers, and those with constant yield and variable price to another set of farmers. We find that many farmers violate first order stochastic dominance, an assumption central to validity of rational decision making under risk. We also find that farmers who perceive themselves as risk takers are more likely to violate them. Keywords: Decisions under risk, Experiments, Stochastic dominance, India
url http://www.sciencedirect.com/science/article/pii/S0970389618302441
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AT sarthakgaurav anomalyindecisionmakingunderriskviolationofstochasticdominanceamongfarmersingujaratindia
AT ashishsingh anomalyindecisionmakingunderriskviolationofstochasticdominanceamongfarmersingujaratindia
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