Neoclassical economic theory hinges on the assumption of rational behaviour. The study of agents' behaviour in the face of risk and uncertainty is often guided by this assumption: agents are assumed to make predictions based on the information available to them and make choices that maximize their expected profit or expected utility. However, research has shown these assumptions are often violated. That is, people do not always behave rationally. Behavioural economics examines the behavioural assumptions of neoclassical economics more critically. Agents are recognised to have non-rational tendencies that often contradict the assumptions and predictions of neoclassical economic theory. Incorporating work of other disciplines, primarily psychological, behavioural economics aims to move away from some of these unrealistic assumptions to more accurately describe and predict agents' economic decisions. Despite the increasing popularity of behavioural economics as a discipline, its methods and principles are applied most often in the consumer behaviour literature. The application of behavioural economics principles to agricultural producers, and the potential implications of behavioural economics in agricultural economics, have received comparatively less attention. The three essays in dissertation take a behavioural approach to decisions of agricultural producers in risky scenarios, paying particular attention to the gambler's and hot hand fallacies (Essay 1), third generation prospect theory (Essay 2), and regret theory (Essay 3). This work contributes to the agricultural economics literature by addressing some of the shortcomings in the neoclassical models frequently used in the discipline. By moving beyond the assumptions of these models and applying some principles of behavioural economics, I endeavour to more accurately model agents' behaviour in the face of risk. Farmers must make important and potentially consequential decisions about their operations. How farmers behave in risky situations is an important area of study, with potential implications for the natural environment, commodity supply, and policy at many levels. Studying and understanding how farmers behave in risky situations is important for how they respond to policy changes, as well as understanding the consequential decisions they make for their operations, which have the potential to more broadly impact the economy and natural environment.
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