Nonstructural Risk Attitude Estimation

Abstract This paper presents an econometric approach to risk attitude estimation that does not require joint estimation of the structure of the firm's technology and input decision rules. The nonstructural approach replaces optimal input choice with the assumption that farmers optimally manage their portfolios of productive activities. By thus shifting the focus from the detailed production decisions of the farm manager to the net returns of the whole farm operation, the modeling problem is simplified. The nonstructural approach is used to estimate risk attitudes in three Indian villages. The results are compared to previous experimental and econometric estimates from the same villages.