Evaluation of Farmer's Risk Attitudes Using Alternative Utility Functional Forms

ABSTRACT The most commonly used utility functional forms are reviewed and their properties compared. Then, using data collected from West Azarbaijan province, utility functions are estimated and absolute risk aversion coefficients measured. Exponential and expopower utility functions classified all farmers as risk averse, but quadratic and cubic utility functions classified 75% and 65% of farmers as risk-averse, respectively. Findings in this study indicated that alternative utility functions may classify farmers’ risk attitudes in different ways.