An Application of Statistical Decision Theory to Farm Management in Sevier County, Utah

• Main Author: Lakawathana, Suwaphot
• Format: Others
• Published: DigitalCommons@USU 1970
• Subjects: Statistical Decision Theory; Farm Management; Sevier County; Utah; Agricultural Economics
• Online Access: https://digitalcommons.usu.edu/etd/2927; https://digitalcommons.usu.edu/cgi/viewcontent.cgi?article=3939&context=etd

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 part icular 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 mod e l using two linear terms was employed to determine the influence of s now pack and reservoir storage on water availability for irrigation purposes during July, August , and September. The Bayesian approach was employed. The optima l action or decision was first determined where only the knowledge of the~ priori probabiities of the states of nature was available. Optimal strategies were then determined where run-off observation was available and the~ poster iori probabilities of the states of nature were determined. Study results indicate that the expected va lue 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 t he "no data" problems . It means that the Bayesian approach gives more than a point estimation a nd is us eful for farm management decision making under risk.