Effects of Risk Attitude and Risk Perceptions on Risk Management Decisions: Evidence from Farmers in an Emerging Economy

Using primary survey data of onion growers in India, this study tests the relationship between and predictability of risk attitude measures on farmers' risk management decisions. We find that farmers with high risk aversion are more likely to adopt farm diversification strategies, good agricultural practices, government-recommended seed varieties, and preventive measures against diseases and pests than farmers with low risk aversion. The likelihood of farmers adopting good agricultural practices decreases with perceived higher risks of low-quality production, a higher risk of losing crops due to weather, and insects and pests.