• Title/Summary/Keyword: Ordered Probit with Known Bounds

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Measuring the Relative Risk Aversion Coefficients of Apple Farmers (사과 농가의 상대위험회피계수 추정)

  • Lin, Qing-Long;Yeo, Jun-Ho;Kim, Tae-Kyun
    • Journal of the Korea Academia-Industrial cooperation Society
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    • v.16 no.2
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    • pp.1036-1044
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    • 2015
  • This paper estimates the relative risk aversion coefficients of apple farmers. Two hypothetical situations are designed and two-stage questionnaires are conducted for each situation. A utility function that has constant relative risk aversion was used, and it was assumed that the relative risk aversion coefficients follow a log-normal distribution. To reduce the hypothetical bias, the data was collected from repetitive questions. As a result, the mean and standard deviation of the relative risk aversion coefficients of apple farmers was 10.915 and 7.516, respectively. The relative risk aversion coefficients conditional on a survey response in each category were also measured. These findings can be used as parameters to analyze the effects of risk management tools.