Principles of risk management service relations in agriculture

The economic literature on risk has explained heterogeneity of behavior among agents facing uncertainty through curvature of a utility function. Many other factors, however, may account for heterogeneous decisions by actors in the same market. First, decision-makers are differentiated on the basis of their access to specific information sources. Secondly, even when information sources are available to all, the value derived by actors from the information will depend on the analytic capacity of the decision-maker to make use of specifically formatted information. We use the results of a survey to demonstrate heterogeneity in informational resources. Further, we identify the ways in which this variance is reflected in the roles and relationships of various actors (e.g. USDA, extension, private consultants, farmers) within agricultural economic information networks. We conclude that research and policy efforts to study or mitigate risk should take into account the relationship between information format and actors' analytic capabilities. (C) 2002 Elsevier Science Ltd. All rights reserved.