Risk, and Market Participant Behavior in the U.S. Slaughter Cattle Market
Journal of Agricultural and Resource Economics
Incomplete information generates uncertainty for market participants in the slaughter-cattle market. Buyer and seller behavior in the presence ofthat uncertainty is examined. Statisti- cally significant risk premiums are charged by packers when buying slaughter cattle on either a live- or dressed-weight basis compared to buying on a grade-and-yield basis. Pratt- Arrow risk-aversion coefficients are calculated for buyers and these remain constant over all marketing methods. Sellers market cattle under all three marketing methods, suggesting producers1 attitudes toward risk (risk-aversion coefficients) vary.
Feuz, D.M., S.W. Fausti and J.J. Wagner. 1995. "Risk, and Market Participant Behavior in the U.S. Slaughter Cattle Market." Journal of Agricultural and Resource Economics 20(1):22-31.