This thesis examines formation and adaptation of reference prices by Manitoban farmers. Research shows that preferences are reference-dependent and that marketing decisions are affected by reference prices. Results obtained in this research suggest that Manitoban farmers’ reference prices for grain are formed primarily by a weighted average price and by the highest price indicated in the experiment. Reference prices were found to adapt in the same direction as market prices, where adaptation to increasing prices was found to be larger than adaptation to decreasing prices. When deciding to sell grain, farmers were more likely to sell when they expected prices to decrease over the next month and when their reference price adjusted downwards towards the current price.

This thesis examines formation and adaptation of reference prices by Manitoban farmers. Research shows that preferences are reference-dependent and that marketing decisions are affected by reference prices. Results obtained in this research suggest that Manitoban farmers’ reference prices for grain are formed primarily by a weighted average price and by the highest price indicated in the experiment. Reference prices were found to adapt in the same direction as market prices, where adaptation to increasing prices was found to be larger than adaptation to decreasing prices. When deciding to sell grain, farmers were more likely to sell when they expected prices to decrease over the next month and when their reference price adjusted downwards towards the current price.

Thesis (doctoral)--Universiẗat, Halle, 2004.

Master-Arbeit Univ. St. Gallen, 2008.

Mannheim, Univ., Diss., 2008.

Bachelor-Arbeit Univ. St. Gallen, 2005.

Habil.-Schr. Univ. Rostock, 2008.

Bachelor-Arbeit Univ. St. Gallen, 2005.

Univ., Diss.--Halle, 2004. / Auch im Internet unter der Adresse http://www.dissertation.de verfügbar.

Uncertainty in economic decision-making can present itself in a variety of forms however the most commonly researched are risk and ambiguity. Recently, there has been a resurgence of interest in evaluating the relationship between individuals’ preference for risk and ambiguity through the use of cognitive decision models. Accurately characterizing these preferences therefore relies on the use of appropriate models and model fitting techniques. Huettel, Stowe, Gordon, Warner & Platt (2006) used Expected Utility Theory (EUT) and the alpha maxmin model to evaluate individuals risk and ambiguity preference, respectively. Their results suggest that risk and ambiguity evoke disparate cognitive processes at both a behavioural and neural level. However, the use of EUT in characterizing risk preference calls into question the accuracy of their results. The present study attempts to re-evaluate the relationship between risk and ambiguity using a more appropriate and well-established model of risky decision-making, Cumulative Prospect Theory (CPT). Using a similar task design as Huettel et al. (2006), participants (N = 93) were required to make a series of decisions between two options that involved monetary outcomes. Each trial consisted of choices between two of the following options: risky, certain and ambiguous. Parameters for both EUT and CPT were estimated on risky trials and used to inform the estimation of ambiguity parameters using the α-maxmin on ambiguous trials. Moreover, each model was estimated using two methods of model fitting, optimization and hierarchical Bayesian analysis methods. Overall, CPT outperformed EUT on risky trials as well, ambiguity parameters from α-maxmin informed by CPT risk parameters outperformed EUT informed α-maxmin parameters. Finally, CPT estimated alpha and beta values were found to be uncorrelated. However, the present results demonstrate that ambiguity preference parameters correlate with the probability distortion parameters that may be a more accurate depiction of an individuals’ level of risk preference. These results can be used to inform future endeavours uncovering the neural correlates of levels of uncertainty in decision-making. / Graduate