Production decision of agricultural products: A game model based on negative exponential utility function

Issue title: Special Section: Intelligent & fuzzy theory in engineering and science

Guest editors: Teresa Guarda, Isabel Lopes and Álvaro Rocha

Article type: Research Article

Authors: Chen, Gang^{; *}

Affiliations: School of Economics, Zhejiang University of Finance and Economics, Hangzhou, China

Correspondence: [*] Corresponding author. Gang Chen, School of Economics, Zhejiang University of Finance and Economics, Hangzhou 310018, China. E-mail: [email protected].

Abstract: The effective supply guarantee of fresh agricultural products is a systematic problem. Farmers should not only pursue economic effectiveness, but also ensure the quality of products. This paper analyzes the supply decision of agricultural products based on negative exponential utility function and game analysis. The negative exponential utility function has been widely used in the study of the risk preferences of farmers. This paper analyses the impact of price fluctuation on the supply of agricultural products. At the same time, it analyses the problem of quality and safety from the perspective of the main body of agricultural products supply under the framework of economics. The income of agricultural products is an important factor affecting their behavioral decision-making. The result shows that: (1) price affects utility values by affecting the profit values and the mean risk-aversion coefficients; (2) market competition gives producers and operators inherent motivation to improve the quality of agricultural products. In the process of production decision-making, it is necessary to ensure that the profit of supplying safe agricultural products is not less than that of supplying conventional agricultural products. Therefore, the government can adopt economic incentive and policy incentive mechanism to protect the economic interests of the main body of safe agricultural products supply.

Keywords: Utility function, optimal decision, supply chain network, quality of agricultural products

DOI: 10.3233/JIFS-179198

Journal: Journal of Intelligent & Fuzzy Systems, vol. 37, no. 5, pp. 6139-6149, 2019