Document de travail

How laboratory experiments could help disentangle the influences of production risk and risk preferences on input decisions

Douadia Bougherara et Céline Nauges

Résumé

The purpose of this article is to further our understanding of input choices (such as pesticides or fertilisers) when producers face production risk that depends on a random shock and on the quantity of input used. Using laboratory experiments, we study the role of risk preferences and public policies (here, a lump-sum subsidy and insurance) on producers’ input decisions in two situations: i) a risk-decreasing input; and ii) a risk-increasing input. Our findings raise questions on the sensitivity of optimal input choices to risk preferences and the relevance of the expected utility model to describe farmers’ decisions.

Mots-clés

laboratory experiment; input choice; production risk; risk preferences; subsidy; insurance;

Référence

Douadia Bougherara et Céline Nauges, « How laboratory experiments could help disentangle the influences of production risk and risk preferences on input decisions », TSE Working Paper, n° 18-903, mars 2018.

Voir aussi

Publié dans

TSE Working Paper, n° 18-903, mars 2018