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dc.contributor.authorCole, Shawn
dc.contributor.authorGiné, Xavier
dc.contributor.authorVickery, James
dc.date.accessioned2013-05-22T13:32:46Z
dc.date.issued2013-05-22
dc.identifier.citationCole, Shawn, Xavier Gine, and James Vickery. "How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment." Harvard Business School Working Paper, No. 13–080, March 2013.en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:10647828
dc.description.abstractWeather is a key source of income risk for many firms and households, particularly in emerging market economies. This paper studies how an innovative risk management instrument for hedging rainfall risk affects production decisions among a sample of Indian agricultural firms, using a randomized controlled trial approach. We find that the provision of insurance induces farmers to shift production towards higher-return but higher-risk cash crops, particularly amongst more-educated farmers. Our results support the view that financial innovation may help mitigate the real effects of uninsured production risk. In a second experiment we elicit willingness to pay for insurance policies that differ in their contract terms, using the Becker-DeGroot-Marshak mechanism. Willingness-to-pay is increasing in the actuarial value of the insurance, but substantially less than one-for-one, suggesting that farmers’ valuations are inconsistent with a fully rational benchmark.en_US
dc.language.isoen_USen_US
dash.licenseOAP
dc.titleHow Does Risk Management Influence Production Decisions? Evidence from a Field Experimenten_US
dc.typeResearch Paper or Reporten_US
dc.description.versionAuthor's Originalen_US
dc.relation.journalHarvard Business School working paper series # 13-080en_US
dash.depositing.authorCole, Shawn
dc.date.available2013-05-22T13:32:46Z
dc.identifier.doi10.1093/rfs/hhw080
dash.authorsorderedfalse
dash.contributor.affiliatedCole, Shawn


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