Intertemporal Risk Management Decisions of Farmers under Preference, Market, and Policy Dynamics



Table 3. Optimal Hedge Ratio and Crop Insurance Coverage: Model Comparison

Alternative Model

Hedge Ratio

Crop Ins.

Cov. Ratio

Specifications

Year1

Year2

Year3

Year4

Year5

Year1-5

Whitman County

GEU full

(α= -0.13, β = 0.89, ρ = 0.9493)

0.25

0.31

0.32

0.32

0.26

0.85

CES-EU

(α = ρ = -1, β = 0.89)

0.29

0.27

0.25

0.25

0.22

0.85

MR-EU

(α = ρ = 1, β = 0.89)

0

0

0

0

0

0.85

MA-EU

(α = -1, U(C) = -1/C, β = 0.89)

0.29

0.27

0.25

0.25

0.22

0.85

Grant County

GEU full

(α= -0.13, β = 0.89, ρ = 0.9493)

0.25

0.31

0.32

0.32

0.24

0.85

CES-EU

(α = ρ = -1, β = 0.89)

0.31

0.28

0.26

0.25

0.21

0.85

MR-EU

(α = ρ = 1, β = 0.89)

0

0

0

0

0

0.85

MA-EU

(α = -1, U(C) = -1/C, β = 0.89)

0.31

0.28

0.26

0.25

0.21

0.85

47



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