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A Behavioral Approach towards Futures Contract Usage (2001)
| Venue: | Australian Economic Papers |
| Citations: | 2 - 2 self |
BibTeX
@ARTICLE{Pennings01abehavioral,
author = {Joost M. E. Pennings and Raymond M. Leuthold},
title = {A Behavioral Approach towards Futures Contract Usage},
journal = {Australian Economic Papers},
year = {2001}
}
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Abstract
choice models; farmers We propose a behavioral decision-making model to investigate what factors, observable as well as unobservable, owner-managers consider regarding futures contract usage. The conceptual model consists of two phases, reflecting the two-stage decision structure of manager’s use of futures. In the first phase owner-managers consider whether futures are within the market choice set for the enterprise. In the second phase the owner-manager decides whether or not to initiate a futures position when confronted with a concrete choice situation. In both phases owner-manager’s beliefs and perceptions play an important role. The proposed model is tested on a data set of Dutch farmers, based on computer-assisted personal interviews. Because we incorporate latent variables (e.g., perceptions and beliefs) in both phases, we propose an estimation procedure that takes the measurement error of these latent variables explicitly into account. The implications of the behavioral decisionmaking model for futures contract design are derived. 1 Joost M.E. Pennings is an associate professor at Wageningen University in the
Keyphrases
latent variable first phase owner-managers manager use estimation procedure choice model future contract usage owner-manager decides joost m.e. penning measurement error second phase associate professor computer-assisted personal interview conceptual model behavioral decision-making model market choice future contract design dutch farmer two-stage decision structure data set concrete choice situation wageningen university future position behavioral decisionmaking model important role owner-managers consider
