Application of Portfolio Theory to Farmer and Lender Behavior

摘要: Randomness of commodity output and prices in agriculture are well-known phenomena that have plagued both farmers their lenders as they develop plans financial programs for the coming year. The same researchers who attempt to model farmer-lender relationships improved explanations farmer lender behavior. Early decision models resource allocation under risk sought maximize expected returns. However, early 1700s, Bernoulli demonstrated irrationality this criterion explaining gambling More recently, portfolio theory, developed by Markowitz Tobin with extensions Sharpe Lintner, has our ability analyze behavior considering variance well value This paper discusses developments reviews its application behavior, considers limitations, suggests several account asset liquidity, liquidity risk, adjustments. We conclude recommendations future theory