Date of Award:

5-1970

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Applied Economics

Department name when degree awarded

Agricultural Economics

Committee Chair(s)

Jay C. Anderson

Committee

Jay C. Anderson

Committee

Allen LeBaron

Committee

James H. Milligan

Committee

Lynn H. Davis

Committee

Darwin B. Nielsen

Abstract

The major purpose of this study is to present selected empirical results of a study employing decision-making theory as a framework for considering decision making under risk. The particular problem involves choices between alternative crop rotations for Sevier County farmers. The study demonstrates the usefulness of the Bayesian theory that gives more than a point estimation.

A multiple regression model using two linear terms was employed to determine the influence of snow pack and reservoir storage on water availability for irrigation purposes during July, August, and September.

The Bayesian approach was employed. The optimal action or decision was first determined where only the knowledge of the a priori probabilities of the states of nature was available. Optimal strategies were then determined where run-off observation was available and the a posteriori probabilities of the states of nature were determined.

Study results indicate that the expected value of the additional information is substantial and come out very close to the expected value of a perfect predictor and higher than the expected value of the "no data" problems. It means that the Bayesian approach gives more than a point estimation and is useful for farm management decision making under risk.

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