Assessing the Impact of Fresh Vegetable Growers’ Risk Aversion Levels and Risk Perception on the Probability of Adopting Marketing Contracts: A Bayesian Approach.
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One of the most frequently used arguments to explain the increased use of contractual
arrangements is that risk drives the choice of contracts. However, there is limited empirical
support for this argument. A Bayesian ordered probit formulation is utilized in this study to
examine the impact of fresh vegetable producers’ personal characteristics on the probability of
adopting marketing contracts. Among the characteristics examined are: risk aversion levels, risk
perception, age, education, income, location. The findings indicate that age, farm size and the
potential to expand the operation are parameters that affect the choice of contracts. On the other
hand, the results do not support the risk shifting hypothesis.