Influence of strategies and heuristics on farmers’ response to change under uncertainty

Hierarchical Decision Models of woolproducers’ decisions provide unique insights into the impact of major price changes. Producers’ lagged response in some contexts appear to be due to the ambiguous decision environment they face, their strategic goals and responses to that environment apart from la...

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Bibliographic Details
Published inAustralian Journal of Agricultural and Resource Economics Vol. 45; no. 4
Main Authors Murray-Prior, Roy B, Wright, Victor E
Format Journal Article
LanguageEnglish
Published Australian Agricultural and Resource Economics Society 2001
SeriesAustralian Journal of Agricultural and Resource Economics
Subjects
Farm Management
Risk and Uncertainty
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Summary:Hierarchical Decision Models of woolproducers’ decisions provide unique insights into the impact of major price changes. Producers’ lagged response in some contexts appear to be due to the ambiguous decision environment they face, their strategic goals and responses to that environment apart from lags caused by factors such as attitude to risk, expectations adjustment, adjustment costs and learning costs. Much of the response to major price changes comes from strategic decisions to change enterprises rather than marginal changes to existing enterprises. In ambiguous environments, methods may need to be found that incorporate simplifying behavioral rules and strategies.