scholarly journals Analyse expérimentale du comportement des producteurs de céréales sèches face au risque financier dans un contexte de changement climatique

2021 ◽  
Vol 88 (1-2) ◽  
pp. 1-26
Author(s):  
Pape Bilal Diakhate
Keyword(s):  
Risk Aversion ◽  
Financial Risk ◽  
Probit Model ◽  
Risk Averse ◽  
Production Loss ◽  
Changement Climatique ◽  
Insurance Policies ◽  
Lottery System ◽  
Tolerable Level

This study has two objectives: to characterize farmers according to their level of financial risk aversion and to analyze the factors explaining their propensity to take financial risk. Using a lottery system inspired by the work of Allais (1953) on 540 farmers in the groundnut basin of Senegal, the results show that 81.38 % of farmers are financially risk averse and only 8.57 % are risk lovers. Estimates with the probit model show that the propensity to take financial risk decreases if the farmer sets himself a high tolerable level of production loss. These results suggest that demand components should be considered in public agricultural financing and insurance policies.

scholarly journals Are Invisible Hands Good Hands in Health Care Markets? Extension

2017 ◽  
Vol 17 (1) ◽  
Author(s):  
Hao Wang
Keyword(s):  
Health Care ◽  
Health Insurance ◽  
Risk Aversion ◽  
Social Welfare ◽  
Absolute Risk ◽  
Health Care Markets ◽  
Risk Averse ◽  
Absolute Risk Aversion ◽  
Insurance Policies ◽  
Equilibrium Level

AbstractA previous study finds that increased competition in health care markets improves social welfare, although consumers use “too much” health care when they have health insurance. The analysis assumes that consumers have a constant Arrow-Pratt coefficient of absolute risk aversion. This note shows that this finding can be extended to the case where consumers are simply risk averse. Furthermore, if insurers offered insurance policies with slightly lower usage prices than the equilibrium level, social welfare would be improved.

Twins Less Frequent Than Expected Among Male Births in Risk Averse Populations

2015 ◽  
Vol 18 (3) ◽  
pp. 314-320 ◽  
Author(s):  
Deborah Karasek ◽  
Julia Goodman ◽  
Alison Gemmill ◽  
April Falconi ◽  
Terry Hartig ◽  
...  
Keyword(s):  
Risk Aversion ◽  
Financial Risk ◽  
Fetal Loss ◽  
Risk Averse ◽  
Household Surveys ◽  
Evolutionary Perspective ◽  
Time Series Regression ◽  
Regression Methods ◽  
Twin Pregnancies ◽  
Male Twin

Male twin gestations exhibit higher incidence of fetal morbidity and mortality than singleton gestations. From an evolutionary perspective, the relatively high rates of infant and child mortality among male twins born into threatening environments reduce the fitness of these gestations, making them more vulnerable to fetal loss. Women do not perceive choosing to spontaneously abort gestations although the outcome may result from estimates, made without awareness, of the risks of continuing a pregnancy. Here, we examine whether the non-conscious decisional biology of gestation can be linked to conscious risk aversion. We test this speculation by measuring the association between household surveys in Sweden that gauge financial risk aversion in the population and the frequency of twins among live male births. We used time-series regression methods to estimate our suspected associations and Box–Jenkins modeling to ensure that autocorrelation did not confound the estimation or reduce its efficiency. We found, consistent with theory, that financial risk aversion in the population correlates inversely with the odds of a twin among Swedish males born two months later. The odds of a twin among males fell by approximately 3.5% two months after unexpectedly great risk aversion in the population. This work implies that shocks that affect population risk aversion carry implications for fetal loss in vulnerable twin pregnancies.

Eliciting Risk Preferences and Elasticity of Substitution

2020 ◽  
Vol 17 (4) ◽  
pp. 314-329
Author(s):  
Johan Burgaard ◽  
Mogens Steffensen
Keyword(s):  
Risk Aversion ◽  
Discount Rate ◽  
Predictive Power ◽  
Recursive Utility ◽  
Risk Averse ◽  
Indirect Utility ◽  
Consistent Estimation ◽  
On Certainty ◽  
Certainty Equivalents ◽  
Elasticity Of Intertemporal Substitution

Risk aversion and elasticity of intertemporal substitution (EIS) are separated via the celebrated recursive utility building on certainty equivalents of indirect utility. Based on an alternative separation method, we formulate a questionnaire for simultaneous and consistent estimation of risk aversion, subjective discount rate, and EIS. From a representative group of 1,153 respondents, we estimate parameters for these preferences and their variability within the population. Risk aversion and the subjective discount rate are found to be in the orders of 2 and 0, respectively, not diverging far away from results from other studies. Our estimate of EIS in the order of 10 is larger than often reported. Background variables like age and income have little predictive power for the three estimates. Only gender has a significant influence on risk aversion in the usually perceived direction that females are more risk-averse than males. Using individual estimates of preference parameters, we find covariance between preferences toward risk and EIS. We present the background reasoning on objectives, the questionnaire, a statistical analysis of the results, and economic interpretations of these, including relations to the literature.

scholarly journals Market-based instruments for risk-averse farmers: rubber agroforest conservation in Jambi Province, Indonesia

2016 ◽  
Vol 22 (2) ◽  
pp. 133-155 ◽  
Author(s):  
Utkur Djanibekov ◽  
Grace B. Villamor
Keyword(s):  
Income Inequality ◽  
Risk Aversion ◽  
Real Options ◽  
Risk Averse ◽  
Variance Model ◽  
Income Uncertainty ◽  
Real Options Approach ◽  
Pigovian Taxes ◽  
Rubber Agroforest ◽  
Mean Variance

AbstractThis paper investigates the effectiveness of different market-based instruments (MBIs), such as eco-certification premiums, carbon payments, Pigovian taxes and their combination, to address the conversion of agroforests to monoculture systems and subsequent effects on incomes of risk-averse farmers under income uncertainty in Indonesia. For these, the authors develop a farm-level dynamic mean-variance model combined with a real options approach. Findings show that the conservation of agroforest is responsive to the risk-aversion level of farmers: the greater the level of risk aversion, the greater is the conserved area of agroforest. However, for all risk-averse farmers, additional incentives in the form of MBIs are still needed to prevent conversion of agroforest over the years, and only the combination of MBIs can achieve this target. Implementing fixed MBIs also contributes to stabilizing farmers’ incomes and reducing income risks. Consequently, the combined MBIs increase incomes and reduce income inequality between hardly and extremely risk-averse farmers.

scholarly journals OPTIMAL OUTCOME SHARING WITH A CONSORTIUM OF CONTRACTORS

2015 ◽  
Vol 22 (5) ◽  
pp. 655-665 ◽  
Author(s):  
S. Mahdi HOSSEINIAN ◽  
David G. CARMICHAEL
Keyword(s):  
Risk Aversion ◽  
Risk Attitude ◽  
Risk Averse ◽  
Optimal Outcome ◽  
Original Solution ◽  
Project Outcome ◽  
Risk Neutral ◽  
Current Practices

Where a consortium of contractors is involved, there exist no guidelines in the literature on what the outcome sharing arrangement should be. The paper addresses this shortfall. It derives the optimal outcome sharing arrangement for risk-neutral and risk-averse contractors within the consortium, and between the consortium and a risk-neutral owner. Practitioners were engaged in a designed exercise in order to validate the paper’s propositions. The paper demonstrates that, at the optimum: the proportion of outcome sharing among contractors with the same risk-attitude should reflect the levels of their contributions; the proportion of outcome sharing among contractors with the same level of contribu­tion should be lower for contractors with higher levels of risk aversion; a consortium of risk-neutral contractors should receive or bear any favourable or adverse project outcome respectively; and the proportion of outcome sharing to a con­sortium of risk-averse contractors should reduce, and the fixed component of the consortium fee should increase, when the contractors become more risk-averse or the level of the project outcome uncertainty increases. The paper proposes an original solution to the optimal sharing problem in contracts with a consortium of contractors, thereby contributing to current practices in contracts management.

Do Migrants Think Differently? Evidence from Eastern European and Post-Soviet States

2018 ◽  
Vol 53 (3) ◽  
pp. 831-868 ◽  
Author(s):  
Ruxanda Berlinschi ◽  
Ani Harutyunyan
Keyword(s):  
Risk Aversion ◽  
International Migration ◽  
The Other ◽  
Eastern European ◽  
Risk Averse ◽  
Economic Liberalism ◽  
Self Selection ◽  
Using Data ◽  
Politically Active ◽  
Beliefs And Attitudes

This research investigates migrant self-selection on values, beliefs, and attitudes using data from Eastern European and former Soviet countries. We find that individuals who intend to emigrate are more politically active, more critical of governance and institutions, more tolerant toward other cultures, less tolerant of cheating, more optimistic, and less risk averse. With the exception of risk aversion, all selection patterns are heterogeneous across regions of origin. On the other hand, no self-selection pattern is detected on education, willingness to pay for public goods, and economic liberalism. These findings provide new insights into the determinants of international migration and reveal some of its less known consequences, such as a possible reduction of domestic pressure for political improvements in post-Soviet states due to politically active citizens’ higher propensity to emigrate.

Cutoff Threshold Decisions for Classification Algorithms with Risk Aversion

2021 ◽  
Author(s):  
Andrea C. Hupman
Keyword(s):  
Risk Aversion ◽  
Risk Attitude ◽  
Classification Algorithm ◽  
Classification Algorithms ◽  
Risk Averse ◽  
Optimal Cutoff ◽  
Data Set ◽  
Risk Neutral ◽  
Bayes Algorithm ◽  
Cutoff Threshold

Classification algorithms predict the class membership of an unknown record. Methods such as logistic regression or the naïve Bayes algorithm produce a score related to the likelihood that a record belongs to a particular class. A cutoff threshold is then defined to delineate the prediction of one class over another. This paper derives analytic results for the selection of an optimal cutoff threshold for a classification algorithm that is used to inform a two-action decision in the cases of risk aversion and risk neutrality. The results provide insight to how the optimal cutoff thresholds relate to the associated costs and the sensitivity and specificity of the algorithm for both the risk neutral and risk averse decision makers. The optimal risk averse threshold is not reliably above or below the optimal risk neutral threshold, but the relation depends on the parameters of a particular application. The results further show the risk averse optimal threshold is insensitive to the size of the data set or the magnitude of the costs, but instead is sensitive to the proportion of positive records in the data and the ratio of costs. Numeric examples and sensitivity analysis derive further insight. Results show the percent value gap from a misspecified risk attitude increases as the specificity of the classification algorithm decreases.

scholarly journals Moving beyond the cost–loss ratio: economic assessment of streamflow forecasts for a risk-averse decision maker

2017 ◽  
Vol 21 (6) ◽  
pp. 2967-2986 ◽  
Author(s):  
Simon Matte ◽  
Marie-Amélie Boucher ◽  
Vincent Boucher ◽  
Thomas-Charles Fortier Filion
Keyword(s):  
Risk Aversion ◽  
Utility Function ◽  
Decision Maker ◽  
Economic Value ◽  
Economic Assessment ◽  
Risk Averse ◽  
Loss Ratio ◽  
Ensemble Forecasts ◽  
Streamflow Forecasts ◽  
Cara Utility

Abstract. A large effort has been made over the past 10 years to promote the operational use of probabilistic or ensemble streamflow forecasts. Numerous studies have shown that ensemble forecasts are of higher quality than deterministic ones. Many studies also conclude that decisions based on ensemble rather than deterministic forecasts lead to better decisions in the context of flood mitigation. Hence, it is believed that ensemble forecasts possess a greater economic and social value for both decision makers and the general population. However, the vast majority of, if not all, existing hydro-economic studies rely on a cost–loss ratio framework that assumes a risk-neutral decision maker. To overcome this important flaw, this study borrows from economics and evaluates the economic value of early warning flood systems using the well-known Constant Absolute Risk Aversion (CARA) utility function, which explicitly accounts for the level of risk aversion of the decision maker. This new framework allows for the full exploitation of the information related to a forecasts' uncertainty, making it especially suited for the economic assessment of ensemble or probabilistic forecasts. Rather than comparing deterministic and ensemble forecasts, this study focuses on comparing different types of ensemble forecasts. There are multiple ways of assessing and representing forecast uncertainty. Consequently, there exist many different means of building an ensemble forecasting system for future streamflow. One such possibility is to dress deterministic forecasts using the statistics of past error forecasts. Such dressing methods are popular among operational agencies because of their simplicity and intuitiveness. Another approach is the use of ensemble meteorological forecasts for precipitation and temperature, which are then provided as inputs to one or many hydrological model(s). In this study, three concurrent ensemble streamflow forecasting systems are compared: simple statistically dressed deterministic forecasts, forecasts based on meteorological ensembles, and a variant of the latter that also includes an estimation of state variable uncertainty. This comparison takes place for the Montmorency River, a small flood-prone watershed in southern central Quebec, Canada. The assessment of forecasts is performed for lead times of 1 to 5 days, both in terms of forecasts' quality (relative to the corresponding record of observations) and in terms of economic value, using the new proposed framework based on the CARA utility function. It is found that the economic value of a forecast for a risk-averse decision maker is closely linked to the forecast reliability in predicting the upper tail of the streamflow distribution. Hence, post-processing forecasts to avoid over-forecasting could help improve both the quality and the value of forecasts.

scholarly journals FALSE CONSCIOUSNESS IN FINANCIAL MARKETS: OR IS IT IN IVORY TOWERS?

2013 ◽  
Vol 4 (1) ◽  
pp. 19-30
Author(s):  
Adi Schnytzer ◽  
Sara Westreich
Keyword(s):  
Risk Aversion ◽  
Financial Markets ◽  
Risk Index ◽  
Recent Model ◽  
Economic Index ◽  
Expected Returns ◽  
False Consciousness ◽  
Risk Averse ◽  
Different Levels ◽  
Negative Expectations

In general, models in finance assume that investors are risk averse. An example of such a recent model is the pioneering work of Aumann and Serrano, which presents an economic index of riskiness of gambles which is independent of wealth and holds (as might be understood from the adjective “economic”) for exclusively risk averse investors. In their paper, they discuss gambles with positive expected returns which will be accepted or rejected by agents which different levels of risk aversion. The question never asked by the authors (and in most of the finance literature) is: Who is offering these attractive gambles? To arrive at an answer, we extend the Aumann-Serrano risk index in such a way that it accommodates gambles with either positive or negative expectations and is thus suitable for both the risk averse and risk lovers.  Once we allow for the existence of risk lovers, it may be shown that in financial markets, many gambles with negative expectations are taken either knowingly or unknowingly so that there are always people that act as if they are risk lovers. The paper concludes with a brief discussion of the implications of our result, in particular that gambling is by no means restricted to the casino or the track.

scholarly journals Internal Inconsistency and Risk Aversion: Implications on Smoking Decisions

2020 ◽  
Vol 29 (1) ◽  
pp. 387
Author(s):  
Ana I. Gil-Lacruz ◽  
Marta Gil-Lacruz
Keyword(s):  
Risk Aversion ◽  
Risk Behaviors ◽  
Internal Consistency ◽  
Social Recognition ◽  
Economic Conditions ◽  
Risk Averse ◽  
Internal Inconsistency ◽  
Individual Decisions ◽  
Internal Coherence ◽  
The Individual

The main contribution of this paper is an analysis of the nature of the link between internal coherence and risk aversion. Both variables play an important role in individual decisions concerning risk behaviors. We compare the levels of internal consistency and risk aversion among smokers and non-smokers. To measure the individual internal coherence and risk aversion; we use a survey that includes lottery questions. Our results confirm that smokers are consistent in their decisions and they behave as risk averse. These results should be treated with circumspection as lottery questions are based on monetary expectations that depend on socio-economic conditions and they obviate other dimensions such as social recognition.

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