Risk perception, risk preference and farmers’ indifference in grain sales

Abstract

ABSTRACT This paper examines the mechanisms by which risk perception affects farmers’ timing of grain sales and the role played by risk preference based on 2019 China Family Database and China Household Finance Survey. The results indicate that high risk perception is more likely to lead farmers to current sales compared with intertemporal sales. It reveals that the underlying reason for farmers’ indifference in grain sales is the increased risk perception under constraints, which causes risky returns from intertemporal sales lower than certain returns from current sales in utility comparison. It is further found that risk preference has a substitution effect on risk perception in farmers’ intertemporal grain sales.