What is it about?
Models of decision-making often include alongside risk attitudes other individual characteristics that have been shown to influence common measures of risk attitudes, which could lead to statistical complications and poor explanations of observed behavior. We document the importance of properly identifying and modeling the influence of other characteristics on risk attitudes to correctly ascertain primary drivers of behavior.
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Why is it important?
Failure to represent relationships between risk attitude, other characteristics, and behavior appropriately can mask the effect of risk attitudes, and lead to inaccurate inferences about behavior.
Perspectives
A more complete understanding of the structure of decision making may assist economists, policymakers, and industry stakeholders in designing and targeting mechanisms to manage or transfer risk.
Dr Jason RV Franken
Western Illinois University
Read the Original
This page is a summary of: Risk attitudes and the structure of decision-making: evidence from the Illinois hog industry, Agricultural Economics, October 2016, Wiley,
DOI: 10.1111/agec.12293.
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