1997/11/01 by Leroy Blakeslee
Agricultural and Biological Sciences · Economics, Econometrics and Finance · Business, Management and Accounting · #Agricultural risk and resilience #Economics of Agriculture and Food Markets #Supply Chain and Inventory Management
paper · pdf · doi:10.2307/1244271
Abstract A method is developed to find sequences of expected utility maximizing decisions under risk aversion when random elements are time‐dependent and additive separable utility of income is implausible. A Taylor‐series approximation to expected utility is used. In an application to marketing stored wheat, expected seasonal sales patterns, early fractional sales of total inventory for risk reduction, and negative skewness in resulting income distributions are noted. Sensitivity to the number of income distribution moments used to approximate expected utility is examined. Six moments produce a good approximation. Use of only mean and variance can give doubtful results.