Behavioral Preferences and Price Risk Management in Agriculture: A Systematic Literature Review

Abstract Recent crises have increased price volatility, yet farmers’ adoption of forward contracts, futures, options, and price insurance remains low. Since this appears puzzling from a standard expected utility maximizing perspective, we systematically review the literature on the relation between behavioral factors and price hedging. We distinguish behavioral preferences, formally integrated into choice models, from psychological factors, lacking mathematical formalization. Most of the 101 reviewed studies focus on futures and rely on risk aversion assuming expected utility maximization, with limited evidence on behavioral economic drivers. Considering nonclassical preferences and psychological factors in choice models might better capture farmers’ risk management decisions.