(DP 1988-03) Production Under Uncertainty: Safety First and the Crop Mix

Abstract

A safety first decision criterion suggests a secondary objectives when the safety condition is satisfied. In the model of this paper, the product mix of a smallholder pursuing safety first in one where the crops produced are equally safe -- he cannot afford to gamble and he does not. When the safety condition is satisfied, he chooses a riskier crop mix the larger his resources or the lower his degree of risk aversion.