Producer decision making under uncertainty: Role of past experiences and question framing

Abstract

Limited research examines the role of reference points or how uncertain outcomes are processed in producer decisions. This study employs a survey containing a split-sample choice experiment varying how uncertain outcomes are portrayed, and assesses multiple candidate reference points. Results suggest that U.S. cattle producers use the best outcome experienced as reference points in their decisions, and the method by which uncertain outcomes are presented impacts loss aversion, marginal willingness to pay, and market participation estimates. This illustrates how research employing split samples, multiple reference points, and alternative methods of portraying uncertain outcomes may better identify producer decision-making.