Scholarship & Research
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Item The impact of farm-level variables on federal crop insurance coverage level selection(Montana State University - Bozeman, College of Agriculture, 2019) Boyd, Mark Weiderspon; Chairperson, Graduate Committee: Eric BelascoThis thesis evaluates the significance of farm-level variables related to cash flow on coverage level selections as a potential explanation for the well-documented behavioral anomaly in producers' federal crop insurance coverage level selection choices. The current crop insurance literature appears to lack a clear explanation of why producers choose to insure at lower or less than economically optimal coverage levels. To inform this question, the relationship between liquidity factors and insurance coverage level selection are estimated empirically using linear and fixed effects models with data from the Agricultural Resource Management Survey, Risk Management Agency Summary of Business, and the Risk Management Agency Actuarial Data Master. Specifically, this research endeavors to evaluate the associations between variables related to cash flow and coverage level selection, as well as isolate the effect of premium rates on coverage selection, in order to provide evidence that constrained cash flow may be the reason for the appearance of nonutility maximization in coverage level selection. The results indicate that variables directly related to cash flow such as higher costs are associated with significant differences in coverage level selection, though the direction of the association is dependent on the type of costs, whether fixed or variable, while higher revenue higher acreage farms insure at higher coverage levels. In addition, higher premium costs are associated with lower coverage level selection, despite subsidy incentives indicating expected cash flow plays a significant role in coverage level decisions.Item The sensitivity of expected utility violations to the experimental design : how context affects risky choice(Montana State University - Bozeman, College of Agriculture, 1994) Roberts, Michael James; Chairperson, Graduate Committee: David E. Buschena.Expected Utility Theory is tested under different question contexts. It is hypothesized that previously cited independence violations may result from experimental biases rather than a shortcoming of the Theory. An experimental survey presents risky choice questions as lotteries and as "real life" scenarios to test the relative frequency of independence violations under different test conditions. Simple proportion-difference test statistics show that some choice pairs elicit significantly different choices under the scenario contexts. A more sophisticated analysis, using logit regression models, finds that the scenario contexts reduce choice biases caused by the similarity of the alternatives. Choices over scenario-contexts are found to be consistent with Expected Utility Theory. Violations of Expected Utility Theory over lottery contexts are attributed to the similarity of the alternatives.