Concept 7: Pay-off matrix and risk attitude

The pay-off matrix describes the outcomes associated with combinations of the level of exogenous or occasional pest attack in a particular crop season and the management strategy employed. The following table illustrates the main features of a pay-off matrix. The data used is for illustration only and is not based on any specific rice crop.

In each cell the physical outcome (rice yield/ha) of each combination of attack level and strategy needs to be assessed and then it can be expressed in $/ha. The cost of each strategy also needs to be calculated for each column. With this information, the net value of each attack level/strategy can be determined.  For instance, where no action is taken (Column 1), the reduction in revenue from No to High Attack is directly related to the yield loss caused. Where the control strategy involves a susceptible variety with monitoring and spraying (when a threshold is exceeded), the outcomes are calculated from - (yield x price) - (cost of monitoring + cost of any spraying).

The pay-off matrix provides a useful means of analysing the efficiency and risk aspects of managing a particular (single) pest problem. It is particularly appropriate for actions that are taken pre-planting, before the level of pest attack is known. For risk-averse decision makers, the bottom row (high pest attack) will be the focus of attention.

Clearly, this analysis tool becomes more complicated where a pest complex is considered and is not really appropriate where pests (such as nematodes, weeds and soil borne diseases) that remain within the field are involved, since they build up over time and need to be considered over a longer time period than one year.