Risk, Utility and the Value of Information in Farmer Decision Making
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A model is developed from decision theory for evaluating probabilistic information, especially for decision makers who are risk averse. The value of information to such a decision maker is disaggregated into mean and variance effects. It is shown that the degree of risk aversion of the decision maker may have important effects on the value attached to the information; however, there is not necessarily a positive correlation between risk aversion and the value of information, since the decision to acquire new information is itself often a risky decision. The concepts and procedures are illustrated by application to a fodder conservation decision with rainfall forecast information.