Three Essays on Crop Insurance: RMA's Rules and Participation, and Perceptions

Download or read book Three Essays on Crop Insurance: RMA's Rules and Participation, and Perceptions written by Alisher Umarov and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this dissertation is to examine further the factors that influence farmers0́9 decisions to participate in crop insurance programs. The factors considered are RMA rules and farmers0́9 yield perceptions. In particular, the first paper examined the role of Risk Management Agency0́9s (RMA) APH calculation rules on the performance, participation, and risk protection level of actual producer history (APH) insurance. The second and third papers examined the presence of behavioral biases, such as miscalibration and better-than-average (BTA) effect in farmers0́9 perceptions, and related these biases to the participation. Examination of RMA rules that omit trend and sample size variability revealed that the current rules create a significant lag in yields, leading to the lower protection levels under APH yields. Results from the second and third papers showed presence of the BTA effect in directly elicited yields while revealing no such relationship for yield elicited under probabilistic framework. However, the econometric results showed no relationship between subjective yields and crop insurance purchase, suggesting that the BTA effect could be due to the elicitation format.