Document Type

Plan B - University Access Only

Award Date

2004

Degree Name

Master of Science (MS)

Department

Economics

First Advisor

Scott Fausti

Abstract

The three main objectives of this research paper are: 1) To develop a producer profile for participants in the South Dakota State Calf Value Discovery (CVD) project, 2) To empirically evaluate the relationship between producer profile attributes and producer behavior towards risk, as measured by the relative risk aversion index approach, and 3) Compare the relative risk aversion index (RRAI) approach to a simple von Neumann-Morgenstern approach. A questionnaire was mailed to 100 participants of the South Dakota State Calf Value Discovery (CVD) project to gather data. Standard statistical results was used to determine which factors significantly influenced individuals in becoming more risk averse or preferring in their investment decisions. The four variables found to be significant were: 1) net-income, 2) age, 3) marital status, and 4) level of education. This study provides empirical evidence that supports previous literature findings in what social, economic, and behavioral attributes influence relative risk aversion (RRA) and what attributes relative risk aversion (RRA) influences. The empirical results were found through the means of two procedures: Spearman correlation matrix and regression analysis. The two procedures were also used to determine if there were any consistency between the relative risk aversion index (RRAI) and von Neumann approaches. This study determined that the relative risk aversion index (RRAI) was the best method in measuring risk preference. Finally, the empirical findings and procedures allowed for the accomplishment of all three objectives of this study.

Format

application/pdf

Number of Pages

96

Publisher

South Dakota State University

Rights

Copyright © 2004 Rozhyer Q. Aware

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