Identifying the Moral hazard and Adverse Selection in the Insurance of Irrigated Wheat Crop in Khorasan Razavi Province

Document Type : Research Paper

Authors

• Arash Dourandish ¹
• Sara Kargar ²
• Mohammad Ghorbani ³

¹ Associate Prof, Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Tehran, Iran

² MSc, Department of Agricultural Economics, Faculty of Agriculture, Ferdowsi University of Mashhad, Mashhad, Iran

³ Prof, Department of Agricultural Economics, Faculty of Agriculture, Ferdowsi University of Mashhad, Mashhad, Iran

10.30495/jae.2023.25037.2171

Abstract

Social risks are another specific phenomenon in the agricultural sector. . In the present study, in order to identify ethical risks and adverse selection in Khorasan Razavi irrigated wheat insurance, a simultaneous equation system model . The sample size was determined by proportional sampling Collected. The results indicate that insured farming in warm-temperate and cold-temperate regions have not reduced inputs for production per unit area of wheat, indicating a lack of ethical risk in these areas. In contrast, the results from the cold zone show that the insured beneficiaries has reduced the consumption of inputs in the area, indicating a moral hazard in this area. Also, the results of the test of the hypothesis of constant returns to scale versus the decreasing or increasing return hypothesis for variable inputs show the absence of adverse selection. Therefore, it is suggested that appropriate training and extension classes be held for farmers in order to better understand the time and manner of using chemical fertilizers and the appropriate time for irrigation.

Keywords

• Agricultural Insurance
• Adverse Selection
• Demand Function
• Production Function
• Moral hazard

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