Introducing socioeconomic characteristics into production analysis under risk
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A theoretical framework is developed to study the effects of socioeconomic factors on farmers' risk attitudes and
production decisions. No maintained assumptions about the individual's utility are required. A key element in this
framework is the categorization of socioeconomic factors by their effect on the farmer's risk attitudes. A simple
methodology for this categorization, based on the equivalence between the Arrow-Pratt measure of risk aversion
and the probability of winning demanded, is proposed. The latter is illustrated with data collected in a survey of 180
Israeli farmers from 20 villages.