This paper examines the production and hedging decisions of the competitive firm under price uncertainty when the firm … difference between the actual profit and the maximum profit attained by making the optimal production and hedging decisions had … aversion, the prevalence of hedging opportunities may have perverse effect on the firm's optimal output level, particularly …

existing belief elicitation results, (ii) can we avoid potential hedging confounds? Our results instill confidence regarding … both issues. We propose an experimental design that eliminates hedging opportunities, and use this to test for the … empirical relevance of hedging effects in the lab. We find no evidence for hedging, comparing the standard hedging-proneʺ belief …