Article ID: | iaor201524579 |
Volume: | 28 |
Issue: | 4 |
Start Page Number: | 553 |
End Page Number: | 566 |
Publication Date: | Dec 2006 |
Journal: | Review of Agricultural Economics |
Authors: | Pannell David J |
Keywords: | optimization, decision: studies |
Economists tend to emphasize the optimum, but in many cases, even large deviations from optimal decisions make little difference to the payoff. This has far‐reaching implications that are under‐recognized, including: (a) decision makers often have a wide margin for error in their production planning decisions, and flexibility to pursue factors not considered in the calculation of payoffs; (b) optimizing techniques are sometimes of limited practical relevance for decision support; (c) the value of information used to refine management decisions is often low; and (d) the benefits of using ‘precision farming’ technologies to adjust production input levels are often low.