Optimal vs. Actual Acreage Decisions: A Regression Analysis of Rational Expectations in US Potato Farming

DOI

10.2991/978-94-6239-644-9_12How to use a DOI?

Keywords

Rational Expectation Equilibrium; potato farming; acreage decisions; regression analysis; agricultural policy

Abstract

This paper investigates how closely actual acreage decisions in U.S. potato farming align with predictions from the Rational Expectations Equilibrium (REE) model. While REE assumes that farmers make fully rational, profit-maximizing decisions, empirical evidence rarely confirms its accuracy for specialty crops like potatoes, which are liable to volatile prices and repeated uncertain production choices. This study uses a regression-based approach to compare REE-predicted optimal acreage with actual planted acreage, using recent U.S. agricultural data, building on econometric methods previously applied to grains and cereals. Farmer decisions are modelled as a function of price per hundredweight, cost per acre, and harvested production, with key coefficients estimated via ordinary least squares regression. Results show significant gaps between predicted and actual acreage, indicating that non-price factors, such as risk aversion, information asymmetries, and market sentiment, meaningfully influence decisions. These findings highlight the limitations of purely rational models in volatile agricultural markets and underscore the need for policies that account for observed behavioural deviations to improve crop supply forecasts and market stability. This study is novel in empirically testing REE predictions against real potato acreage, offering applicable insights for agricultural economists and policymakers aiming to optimize resource allocation under uncertainty.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Aditi Koorse
AU  - Shweta Loonkar
AU  - Karishma Desai
PY  - 2026
DA  - 2026/04/19
TI  - Optimal vs. Actual Acreage Decisions: A Regression Analysis of Rational Expectations in US Potato Farming
BT  - Proceedings of the Global Innovation and Technology Summit “AAROHAN 3.0”_Engineering track (GITS-EAS 2025)
PB  - Atlantis Press
SP  - 144
EP  - 153
SN  - 2352-5401
UR  - https://doi.org/10.2991/978-94-6239-644-9_12
DO  - 10.2991/978-94-6239-644-9_12
ID  - Koorse2026
ER  -