Risk perceptions, preferences and management strategies: evidence from a case study using German livestock farmers

We analyze the factors affecting farmers' choice accounting for farm, farmer, and household characteristics as well as elicited risk perception and risk preferences. We consider three alternative hypothetical methods for assessing risk preferences to test the stability and behavioral validity of them. Our case study focuses on livestock farmers in the German region North Rhine-Westphalia. We find that risk preferences are context depending, i.e. differ across different fields of farm-level decision-making. Furthermore, our analysis shows that risk-averse farmers are more likely to prioritize on-farm risk management strategies over off-farm strategies. Moreover, higher risk perception, age, subjective numeracy, farm succession, farm size, and the proportion of rented land show a significant impact on farmers' risk behavior