Activity 26 : Utility function – Solution

In the two methods, the average income is lower, and so is the standard deviation. Which is understandable since a risk reduction involves a lower income.

Note that the diversification of cropping patterns is more significant with the expected utility maximization method. But this higher diversification level does not necessarily lead to the minimization of the standard deviation. Indeed, the standard deviation of the Target MOTAD method is the lowest. This result can be linked to the fact that even if the cropping pattern is more diversified in terms of different crops grown, two crops are hardly ever grown and the seed cabbage, for instance, which shows significant variation, is still very present. However, the four crops of the Target MOTAD model are more heterogenous.

If you did not manage to write the model or in order to check that your equations are accurate, compare with the following model : modelEco_lauragaisCARA.gms.