Procedimiento de reglaje hidráulico del equipo

It is evident that commodity trading involves taking risky decisions. For example, Williams and Malcolm (2012) noted that decision-making in wheat farming, particularly trading on free markets, is considered to be challenging. However, farmers have to make such decisions regularly (Kim, Brorsen and Anderson, 2010). Pennings et al. (2008) argue that a commodity trading decision in practice is highly complex as it involves many decisions, and this results in difficulties in searching for relevance information and evaluating every decision due to humans’ cognitive limitations. Consequently, risk-taking decisions are an important component in commodity trading. Traders make risk-taking decisions on a daily basis, or even several times a day, either to incurring risk or transfer this risk. However, to make the right decision to buy, sell or stock commodity products is still a puzzling task.

Making decisions is an everyday life activity, but in business it seems to be different, as one decision might determine whether or not the business can survive (Turban, Delen and Sharda, 2013). There are different levels of importance for decision-making in

business, ranging from operational and tactical, to strategic decisions that are relevant to safe or risky and uncertain environments (Turban, Delen and Sharda, 2013). Decision- making under risk is one of the most active research areas in decision-making. This may be because it is challenging to find a solution. Wang et al. (2010) pointed out the importance of decisions in optimising the management of price risk, and also found that such solutions depend on the type of market, the models used for hedging and the time length.

Decision-making is not always rational, as some decisions have to be made with limited time and resources (Simon, 1955). In practice, intuition plays a vital role in decision- making under risk (Gehner, Halman and de Jonge, 2006). Moreover, for a situation that is uncertain or ambiguous, the rational way of thinking cannot be applied easily and intuitive decision-making seems to be the favoured choice. When a decision is made in uncertain circumstances, there is no consensus as to its effectiveness. For instance, in commodity markets, Wang, Wu and Yang (2015) argued that optimal decision-making in hedging price risk is still inconclusive, even though there is a large volume of published studies on this subject. On such occasions, when the results of rational decisions are not always reliable, intuitive decisions (heuristics) are considered as an alternative (Gigerenzer and Selten, 2002). However, intuition itself also has some limitations. Thus, the appropriate solution for decision-making in uncertain business environments may fall between a combination of rational and intuitive decisions, which can complement each other’s limitations.

In the same vein, with Simon’s bounded rationality, Gigerenzer and Goldstein (1996, p. 650) argued that “Humans and animals make inferences about the world under limited time and knowledge.” In contrast to the prospect theory, people’s expertise differs as we learn by interacting with environments and develop heuristics (Gigerenzer and Selten, 2002). According to Shanteau (1992, p. 263), “The competence seen in experts depends on having stable strategies developed in response to their environment.” However, unlike safe environments, those considered as risky business environments, include those subject under price risk, it is not easy to evaluate the effectiveness of the associated decisions. As a result, it may be difficult to learn from such environmental feedback. In recent years, a considerable amount of literature has been published on normative models in hedging optimisation or market price analysis (Cotter and Hanly, 2012; Caporin, 2013; Chang, González-Serrano and Jimenez-Martin, 2013; Power et al., 2013; Yang and Yang, 2013). These kinds of studies concentrated on research into the trading

managing price risks (Conlon, Cotter and Gencay, 2012). Risk-averse supply stakeholders are likely to transfer their price risks to others by hedging. Nevertheless, even some commodity supply stakeholders, who define themselves as risk takers, also hedge some of their commodity portfolios. This depends on what price risks they would like to take, thus, they hedge the remainder. However, hedging functions do not always work properly (Chung-Chu et al., 2012); for example, a price basis between spot and futures markets (Liciotti et al., 2014), or in a range of products in the related commodities (Kim, Brorsen and Yoon, 2014). These problems result in hedging activities becoming a complex task.

Hedging activities are relevant to selecting PRM instruments (Sherafatmand, Yazdani and Moghaddasi, 2014), and the strategy to maximise performance when combined with physical trading activities (Sanda, Olsen and Fleten, 2013). There are theoretical and empirical aspects to hedging with futures contracts, which are summarised by Lien and Tse (2002). On the one hand, from a theoretical view, price hedge strategies are likely to minimise the variance of portfolios by maximising the expected utility function. On the other hand, from an empirical view, the improvement in hedge ratio estimation, to become as optimal as possible in this time-varying context, is one of the most active research areas.

More recent attention has focused on behaviours, ranging from the context of financial investors (Sadi et al., 2011; Yazdipour, 2011) to farmers (Shapiro and Brorsen, 1988; Jordaan and Grové, 2010; Wang et al., 2010; Williams and Malcolm, 2012). Risk-taking decisions made by commodity traders are potentially impacted by several different factors. They can be classified into economic, operational, sociological and psychological factors (Al-Tamimi, 2006; Chang, McAleer and Tansuchat, 2011; Bhattacharya, 2012; Williams and Malcolm, 2012). Economic factors include supply and demand, operational factors include accounting, production and warehouse capacity, sociological factors include customers and suppliers’ relationships and social responsibility and psychological factors include previous negative outcomes and loss aversion. These factors could affect decisions in risk-taking in both a positive and negative way.

After reviewing literature related to risk-taking decisions, the next section reviews literature relevant to where to sell commodity products and how to choose a market amongst those available.