TY - JOUR AU - Luo, Boyingzi PY - 2020/01/28 Y2 - 2024/03/28 TI - Moral Hazard in Agricultural Yield Insurance JF - Archives of Business Research JA - ABR VL - 8 IS - 1 SE - Articles DO - 10.14738/abr.81.7753 UR - https://journals.scholarpublishing.org/index.php/ABR/article/view/7753 SP - 163-171 AB - <p>In agricultural yield insurance practices, there are two main categories of insurance products which differed from the targeted insured yield, namely area-yield based insurance and individual-based insurance. A common knowledge is that individual-yield based insurance has more flexibility that could meet the real demand of insureds, while having much more severity of moral hazard and higher administration costs. Relatively, area-yield based insurance has lower risk of moral hazard, but obtaining bias, or so-called basis risk at the same time. In this paper, we use an improved modified Miranda Decomposition Model to establish a theoretical framework of farmers behaviors when assuming their goals are to maximize the expected rate of return in agricultural production process under both individual-yield and area-yield insurance. The results show that these two distinct arrangements may cause different motivation to farmers, seducing them act or not act in moral hazard manner.</p> ER -