Information, Processing Capacity, and Judgment Bias in Risk Assessment

  • David R. Just
Chapter
Part of the Natural Resource Management and Policy book series (NRMP, volume 23)

Abstract

Many agricultural economists cite risk as one of the most important elements of the farm problem (Gardner 1992). The focus of this literature has been to estimate the level of risk aversion across decision makers, and then estimate the effects of risk aversion on market movements (see for example Binswanger 1980, Just and Pope 1987, Just and Zilberman 1983). Arrow (1971) attributed risk aversion to the curvature of the individual’s utility of wealth function. This measure of risk aversion is based on the idea that diminishing marginal utility of wealth leads one to value larger amounts of money less than one would otherwise, and hence engage in fewer risks involving possible large gains or losses.

Keywords

Utility Function Risk Aversion Marginal Utility Risk Attitude Risk Preference 
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Copyright information

© Springer Science+Business Media New York 2002

Authors and Affiliations

  • David R. Just
    • 1
  1. 1.University of CaliforniaBerkeleyUSA

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