Combining risk perception and risk attitude: A theoretical model for understanding farmers’ risk behaviour

Frankwin van Winsen, Yann de Mey, Ludwig Lauwers, Steven Van Passel, Mark Vancauteren, Erwin Wauters

Onderzoeksoutput: Bijdrage aan congresGepubliceerd abstract


Risk considerations are becoming increasingly important in agriculture. For example, volatility of both output and input prices is expected to increase due to globalization, liberalisation and increased trade levels. Surprisingly, despite the unanimous agreement on the growing importance of risk and despite a huge body of literature, the practical application in the agricultural domain of this
literature is little. Further, even when it is applied, risk management often fails to meet expectations, as businesses fail and opportunities are left untaken. Clearly the mere existence of principles, processes and knowledge is not sufficient to
guarantee success. The focus of this study relates to the difference between theoretical conceptions of risk and risk behaviour on the one hand, and the conceptions of risk and risk behaviour of individual decision makers on the other. Put simply,
individual risk behaviour is, despite a huge body of literature not well understood and unless we are able to improve our understanding of what decision makers would do, risk management tools advising decision what they ought to do will
fail. This observation is not new in itself. However, while we do not think that any expert in agricultural risk management will falsify this idea, it is virtually never considered in the research literature. We want to direct the reader to the seminal paper by Sitkin and Pablo (1992), who, inspired by the very same conclusion, developed a risk behaviour model for company managers. Our research builds on this work and modifies it by focusing on agricultural decision makers and by involving the decision makers in building the model. Traditionally, methods in risk management practice, such as the subjective expected utility approach, regard risk management as the process of maximizing risk preferences, given the objectively measured or estimated risk. Risk perception is not considered explicitly, but implicitly it is assumed that whenever risk management strategies are inadequate, this has to do with either the inability of calculate the objective risk, or a biased perception of the objective risk. Risk management tools then function as a way to inform the decision maker on the objective risk, such that risk perception equals the objective risk. In this study, we try to bridge the gap between literature and practise by reviewing the determinants of risk and risk behaviour from the literature.
Furthermore we present a basic model reconciling these determinants
Oorspronkelijke taalEngels
Aantal pagina’s1
PublicatiestatusGepubliceerd - 18-jun.-2013
EvenementSRA-E Conference - Trondheim, Noorwegen
Duur: 16-jun.-201320-jun.-2013


CongresSRA-E Conference
Internet adres


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