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Use of strategies and decision rules by Australian wool producers to manage uncertainty
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Use of strategies and decision rules by Australian wool producers to manage uncertainty

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  • Murray-Prior, Roy B.
  • Wright, Vic

Abstract

Decisions by Australian wool producers were modelled with a technique combining personal construct psychology and hierarchical decision models. Both strategic and tactical approaches were evident in wool producers’ responses to the risks associated with producing and marketing their wool. Strategic responses included avoiding short to medium-term response to price changes, diversification, maintaining equity and selling wool at auction in the same sale each year. Producers identified many types of risk, with each engendering a distinctive response. Similarly the context of a decision appeared to have a major influence on the attitude to risk. Simplifying decision rules were apparent that helped producers deal with the physical, information, and processing constraints of an ambiguous decision-making environment. One implication of these results may be that prescriptive advice must recognise the importance of strategy and decision rules as a response to uncertainty and ambiguity. A second is that such advice should also take account of the influence of context on attitude to risk and ambiguity.

Suggested Citation

  • Murray-Prior, Roy B. & Wright, Vic, 2004. "Use of strategies and decision rules by Australian wool producers to manage uncertainty," AFBM Journal, Australasian Farm Business Management Network, vol. 1, pages 1-16.
    • Handle: RePEc:ags:afbmau:120919
    DOI: 10.22004/ag.econ.120919
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    Cited by:

    1. Jackson, Elizabeth & Quaddus, Mohammed & Islam, Nazrul & Stanton, John & Hoque, Zohurul, 2007. "A Multi-Disciplinary Approach For Determining Adoption Of Agricultural Price Risk Management Strategies," 81st Annual Conference, April 2-4, 2007, Reading University, UK 7985, Agricultural Economics Society.
    2. Kaine, Geoff & Lees, Jim & Wright, Vic, 2007. "An Approach to Predicting Demand for an Agricultural Innovation," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 15.
    3. Lisa Cowan & Geoff Kaine & Victor Wright, 2013. "The Role of Strategic and Tactical Flexibility in Managing Input Variability on Farms," Systems Research and Behavioral Science, Wiley Blackwell, vol. 30(4), pages 470-494, July.
    4. Crosthwaite, Jim & Moll, Jim & Dorrough, Josh & Malcolm, Bill, 2009. "Re-organising farm businesses to improve environmental outcomes," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 17, pages 1-25.

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