Accounting for Heterogeneity in Hedging Behavior: Comparing & Evaluating Grouping Methods

Heterogeneity, i.e., the notion that individuals respond differently to economic stimuli, can have profound consequences for the interpretation of behavior and the formulation of agricultural policy. This paper compares and evaluates three grouping techniques that can be used to account for heterogeneity in financial behavior. Two are well established: company-type grouping and cluster analysis. A third, the generalized mixture regression model, has recently been developed and is worth considering as market participants are grouped such that their response to the determinants of economic behavior is similar. We evaluate the grouping methods in a hedging framework by assessing their ability to reflect relationships consistent with theory. The empirical findings show that the economic relationships are more consistent with theory within the groups identified by the mixture model, and suggest that researchers interested in identifying segments of the population in which participants behave in a similar manner may consider using of mixture model in the presence of heterogeneity in financial behavior.economic behavior, heterogeneity, hedging, methods, Risk and Uncertainty, A10, B40, C1, D0, G0, L2, Q13,

SURVEYING FARMERS: A RESEARCH NOTE

Mail surveys are a very popular instrument for researchers as well as government agencies and commercial firms to obtain information about farmers. A large percentage of farmers do not respond to these mail surveys. To gain insight into why farmers do not respond and their preferences regarding mail surveys, farmers who did not respond to a mail survey were interviewed. From our field study it appears that a large proportion does not even read the questionnaire. Furthermore, the period in which the survey is sent along with the form and amount of compensation, the sender of the questionnaire, and the length of the questionnaire has a crucial impact on the willingness to participate.Research Methods/ Statistical Methods,

Modeling Farmers' Use of Market Advisory Services

In an effort to improve marketing of their products, many farmers use market advisory services (MAS). To date, there is only fragmented anecdotal information about how farmers actually use the recommendations of market advisory services in their marketing plans, and how they choose among these services. Based on the literature on consulting services usage, a conceptual framework is developed in which perceived performance of the MAS regarding realized crop price and risk reduction, and the match between the MAS and the farmer's marketing philosophy drive MAS usage. To account for possible heterogeneity among farmers regarding to the use of MAS, we introduce a mixture-modeling framework that is able to identify unobserved heterogeneity. With this modeling framework we are able to simultaneously investigate the relationship between market advisory usage and the key components of our conceptual model for each unobservable segment in the population. A large scale interview of US farmers that contained several experiments revealed that farmers' use of MAS not only depends on the outcome of their services (price and risk reduction performance) but also on the way these services are delivered, i.e., the match of marketing philosophy between farmers and MAS. The influence of the factors in our conceptual model did not influenced farmers MAS usage equally across the whole sample. Using the generalized mixture model framework we found 5 segments that differed regarding the influence that these factors have on farmers MAS usage. The heterogeneity of the farmers appeared to be unobserved, in that it could not be traced back to observable variables such as age and region. It is the decision-making process itself, as reflected in our conceptual model, that caused the heterogeneity.Marketing,

Crop Farmers’ Use of Market Advisory Services

This study sought to examine the nature of farmers’ use of market advisory services based on the results of a survey of US crop producers. The survey revealed that market advisory service users tend to be significantly more risk seeking than non-users. Survey results indicated a large range in patterns of use of advisory services. Most farmers use advisory services to the greatest extent for marketing information, market analysis, and to keep up with markets. General guidelines (market strategies and price information) are utilized more than specific advice (e.g., specific pricing decisions, price forecasts). Only 11% of farmers reported that they closely follow the marketing recommendations provided by advisory services. Nonetheless, farmers report that the information provided by advisory services has a substantial impact on their marketing decisions. The implications of these results for advisory services, farmers, extension programs and research are discussed.Agricultural Finance,

The Impact of Market Advisory Service Recommendations on Producers' Marketing Decisions

A conceptual framework is developed which provides insight into the factors affecting the impact of market advisory service (MAS) recommendations on producer pricing decisions. Data from a survey of 656 U.S. producers reveal that the perceived performance of the MAS, the way in which MAS recommendations are delivered, as well as the match between MAS and producers' marketing philosophy, are important factors explaining the impact of MAS recommendations. Risk attitude does not affect the impact of MAS recommendations on producers' decisions, suggesting producers are more interested in the price-enhancing characteristics of MAS advice than in its risk-reducing features. Key words: market advisory services, ordered probit model, producers' marketing decisionsmarket advisory services, ordered probit model, producers' marketing decisions, Marketing,

HOW TO GROUP MARKET PARTICIPANTS? HETEROGENEITY IN HEDGING BEHAVIOR

Using a generalized mixture model, we model individual heterogeneity by identifying groups of participants that respond in a similar manner to the determinants of economic behavior. The procedure emphasizes the role of theory as the determinants of behavior are used to simultaneously explain market activities and to discriminate among groups of market participants. We show the appealing properties of this modeling approach by comparing it with two often used grouping methods in an empirical study in which we estimate the factors affecting market participants' hedging behavior.Institutional and Behavioral Economics,

THE ROLE OF MARKET ADVISORY SERVICES IN CROP MARKETING AND RISK MANAGEMENT: A PRELIMINARY REPORT OF SURVEY RESULTS

The purpose of this report is to provide a preliminary summary of the results of a survey designed to help answer the questions about subscriber use of market advisory services. Importantly, this research is a cooperative partnership between the University of Illinois and the Data Transmission Network. The survey participants are commercial producers of major grain, oilseed and fiber crops, representing important agricultural areas of the US. The survey has three broad objectives, including 1) how US producers perceive the riskiness of various aspects of farming; 2) how US producers manage farm business risk, and 3) how US producers select and use market advisory services.Marketing, Risk and Uncertainty,

Searching for Lyme borreliosis in Australia: Results of a canine sentinel study

Background: Lyme borreliosis is a common tick-borne disease of the northern hemisphere that is caused by bacterial spirochaetes of the Borrelia burgdorferi (sensu lato) (Bbsl) complex. To date, there has been no convincing evidence for locally-acquired Lyme borreliosis on the Australian continent and there is currently a national debate concerning the nature and distributions of zoonotic tick-transmitted infectious disease in Australia. In studies conducted in Europe and the United States, dogs have been used as sentinels for tick-associated illness in people since they readily contact ticks that may harbour zoonotic pathogens. Applying this principle, we used a combination of serological assays to test dogs living in tick 'hot spots' and exposed to the Australian paralysis tick, Ixodes holocyclus, for evidence of exposure to B. burgdorferi (s.l.) antigens and other vector-borne pathogens. Results: Altogether, 555 dogs from four demographic groups were recruited into this study. One dog had evidence of exposure to Anaplasma spp. but no other dog was positive in screening tests. A total of 122 dogs (22.0%) had a kinetic ELISA (KELA) unit value > 100, and one dog with a high titre (399.9 KELA units) had been vaccinated against B. burgdorferi (sensu stricto) before travelling to Australia. Older dogs and those with a history of tick paralysis were significantly more likely to have a KELA unit value > 100. Line immunoassay analysis revealed moderate-to-weak (equivocal) bands in 27 (4.9%) dogs. Conclusions: Except for a single dog presumed to have been exposed to Anaplasma platys, infection with Anaplasma spp. B. burgdorferi (s.l.), Ehrlichia spp., and Dirofilaria immitis, was not detected in the cohort of Australian dogs evaluated in this study. These results provide further evidence that Lyme borreliosis does not exist in Australia but that cross-reacting antibodies (false positive results) are common and may be caused by the transmission of other tick-associated organisms

Complex Choices: Producers Risk Management Strategies

Producers have a wide variety of risk management instruments available. How do producers make a choice of risk management instruments? Using the recently developed choice bracketing framework, we examine what risk management strategies producers use and identify the factors that drive their risk management decisions. Our results identify that producers use a wide variety of combinations of risk management instruments and that they bracket their choices into sets of alternative risk management instruments. Using multinomial logit models to estimate the choice process provides information about the factors that influence producers' decision making. The results show that broad bracketing producers use different risk management instruments than narrow bracketers. Policy makers and financial institutions can improve the performance of their programs and products when they are able to identify the bracketing level of segments of producers.Risk and Uncertainty,

The Paranormal is (Still) Normal: The Sociological Implications of a Survey of Paranormal Experiences in Great Britain

Historically, there has been limited sociological interest in the paranormal and no systematic study of reported paranormal experiences. There are also few medium-to-large-scale survey results with nationally representative populations focusing on paranormal experiences. This paper provides details of an exploratory survey conducted in 2009 with a nationally representative sample of 4,096 adults aged 16 years and over across Great Britain. Our findings show that 37% of British adults report at least one paranormal experience and that women, those who are middle-aged or individuals resident in the South West are more likely to report such experiences. These results establish incidence levels of reported paranormal experiences in contemporary Britain. We argue also that they merit a more sustained sociological consideration of the paranormal. In this respect we renew and update the robust justification and call for serious research positioning the paranormal as a social phenomenon, originally proposed well over thirty years ago by Greeley (1975)