Choosing Treatment Policies Under Ambiguity
AbstractEconomists studying choice with partial knowledge typically assume that the decision maker places a subjective distribution on unknown quantities and maximizes expected utility. Someone lacking a subjective distribution faces a problem of choice under ambiguity. This article reviews recent research on policy choice under ambiguity, when the task is to choose treatments for a population. Ambiguity arises when a planner has partial knowledge of treatment response and does not feel able to place a subjective distribution on the unknowns. I first discuss dominance and alternative criteria for choice among undominated policies. I then illustrate with the choice of a vaccination policy by a planner who has partial knowledge of the effect of vaccination on illness. I next study a class of problems in which a planner may want to cope with ambiguity by diversification, assigning observationally identical persons to different treatments. Lastly, I consider a setting in which a planner should not diversify treatment.
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Bibliographic InfoArticle provided by Annual Reviews in its journal Annual Review of Economics.
Volume (Year): 3 (2011)
Issue (Month): 1 (09)
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Find related papers by JEL classification:
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
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- Berger, Loïc & Bleichrodt, Han & Eeckhoudt, Louis, 2013.
"Treatment decisions under ambiguity,"
Journal of Health Economics,
Elsevier, vol. 32(3), pages 559-569.
- Hahn, Jinyong & Ridder, Geert & Snider, Connan, 2013. "Partial identification and mergers," Economics Letters, Elsevier, vol. 118(1), pages 126-129.
- repec:bos:wpaper:wp2013-001 is not listed on IDEAS
- Charles F. Manski, 2012. "Choosing Size of Government Under Ambiguity: Infrastructure Spending and Income Taxation," NBER Working Papers 18204, National Bureau of Economic Research, Inc.
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