Risk and transactions cost in contracting: Results from a choice-based experiment

Darren Hudson, Jayson Lusk

Research output: Contribution to journalArticlepeer-review

29 Scopus citations

Abstract

Contracting is a contentious issue in agriculture. Competing theories assert that risk or transactions cost drive contracting decisions, with some argument that autonomy also plays a role. We examine preferences for different contract attributes using a choice-based conjoint experiment. Results of a study of agricultural producers show that both risk and transactions cost play a role in contracting decisions. Autonomy also plays a role, especially to the extent that producers wish to avoid total loss of autonomy. These results suggest that the effects of risk and transactions cost are relative and should both be considered when analyzing contracting decisions.

Original languageEnglish
Pages (from-to)21-39
Number of pages19
JournalJournal of Agricultural and Food Industrial Organization
Volume2
Issue number1
DOIs
StatePublished - 2004

Keywords

  • Autonomy
  • Choice-based conjoint
  • Contracting
  • Experiments
  • Risk
  • Surveys
  • Transactions cost

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