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In this study, the Marketing in a New Era (MINE) grain marketing simulation game is used to carry out a context-rich economic experiment to evaluate the role of risk preferences in grain marketing decisions. The model of risk preferences that we consider is an improved Safety First decision rule model proposed by Levy and Levy (2009). We experimentally test if Safety First decision rule describes individuals’ post-harvest marketing decisions. In our experiment, we incorporate real-world features which are usually omitted in marketing studies such as: multiple storage decisions, storage cost, actual price series and multiple contract frequency. MINE plays a critical role by allowing us to observe participant’s intra-season hedging decisions. Our results indicate that Safety First matters in post-harvest marketing decisions. Specifically, individuals with strong Safety First preferences sell significantly more grain at the spot market right after harvest compared to individuals without strong Safety First preferences. This research may be of interest to those working on marketing advisory services, in developing guidelines for optimal marketing strategies that apart from market and farm characteristics should consider personal characteristics as well.
Advisors: Simanti Banerjee and Cory Walters