Land Allocation in the Presence of Estimation Risk

dc.contributor.author Hayes, Dermot
dc.contributor.author Lence, Sergio
dc.contributor.author Hayes, Dermot
dc.contributor.author Lence, Sergio
dc.contributor.department Economics
dc.date 2018-02-13T08:10:31.000
dc.date.accessioned 2020-06-30T02:09:07Z
dc.date.available 2020-06-30T02:09:07Z
dc.date.copyright Sun Jan 01 00:00:00 UTC 1995
dc.date.embargo 2013-04-01
dc.date.issued 1995-07-01
dc.description.abstract <p>Estimation risk occurs when parameters relevant for decision making are uncertain. Bayes' criterion is consistent with expected-utility maximization in the presence of estimation risk. This article examines optimal (Bayes') land allocations and land allocations obtained using the traditional plug-in approach and two alternative decision rules. Bayes' allocations are much better economically than the other allocations when there are few sample observations relative to activities. Calculation of certainty equivalent returns (CERs) with estimation risk is also discussed and illustrated. CERs are typically (and incorrectly) calculated with the plug-in approach. Plug-in CERs may be extremely misleading.</p>
dc.description.comments <p>This article is from <em>Journal of Agricultural and Resource Economics</em> 20, no. 1 (1995) 49–63.</p>
dc.format.mimetype application/pdf
dc.identifier archive/lib.dr.iastate.edu/econ_las_pubs/7/
dc.identifier.articleid 1008
dc.identifier.contextkey 3979188
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_pubs/7
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/21933
dc.language.iso en
dc.source.bitstream archive/lib.dr.iastate.edu/econ_las_pubs/7/20010049.pdf|||Sat Jan 15 01:31:59 UTC 2022
dc.subject.disciplines Agribusiness
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Economics
dc.subject.keywords Bayes' decision criterion
dc.subject.keywords certainty equivalent
dc.subject.keywords estimation risk
dc.subject.keywords expected utility
dc.subject.keywords uncertainty
dc.subject.keywords risk
dc.title Land Allocation in the Presence of Estimation Risk
dc.type article
dc.type.genre article
dspace.entity.type Publication
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relation.isAuthorOfPublication 3c26c85e-921b-4cd2-b2e9-e0ea81c43adb
relation.isOrgUnitOfPublication 4c5aa914-a84a-4951-ab5f-3f60f4b65b3d
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