Review on Decision-making under Risk and Uncertainty in Agriculture

One of the most celebrated and feared concepts in the world today are risk which is the product of uncertainty. Many studies said, risk and uncertainty are often used interchangeably as they are the same thing, but it is not true. While risk can be measured and estimated but uncertainty cannot. Unce...

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Bibliographic Details
Published in:Economic affairs (Calcutta) 2017-09, Vol.62 (3), p.447-453
Main Authors: Hamsa, K.R, Bellundagi, Veerabhadrappa
Format: Article
Language:English
Subjects:
Agricultural economics
Agricultural production
Agriculture
Crops
Decision making
Farmers
Linear programming
Management decisions
Probability
Profitability
Profits
Volatility
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Summary:One of the most celebrated and feared concepts in the world today are risk which is the product of uncertainty. Many studies said, risk and uncertainty are often used interchangeably as they are the same thing, but it is not true. While risk can be measured and estimated but uncertainty cannot. Uncertainty regarding complete unawareness of the future and there is no amount of technical adjustment or mathematically delicacy that can change our basic ignorance of the future. However, risk and uncertainty cannot be separated because where there is uncertainty, there is risk. The probability of risk can be measured precisely, while that of the uncertainty can only be measured through the subjective likelihood depending on the marginal utility of an individual. Probably, no single model is the best at farm level, but the use of, MOTAD with compromise programming, marginal utility of money and Linear programming (LP) technique seems to offer a more powerful analytical instrument for agricultural systems modeling with respect to risk, uncertainty and decision-making, respectively.
ISSN:0424-2513
0976-4666
DOI:10.5958/0976-4666.2017.00056.0