fbpx How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment | Harvard Kennedy School

Additional Authors:

  • Shawn Cole

Excerpt

How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment. Shawn Cole, SeptemberĀ 9, 2014, Paper. "Weather is a key source of income risk for many firms and households, particularly in emerging market economies. This paper studies how an innovative risk management instrument for hedging rainfall risk affects production decisions among a sample of Indian agricultural firms, using a randomized controlled trial approach. We find that the provision of insurance induces farmers to shift production towards higher-return but higher-risk cash crops..." Link verified August 21, 2014