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Prevention of diseases and preventive co-payment rate

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  • François Maréchal

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    (CRESE, University of Franche-Comté (France))

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    Abstract

    In this paper, we use the Rank-Dependent Expected-Utility (RDEU) model to analyse the preventive behaviour of an individual faced with the risk of being sick. The RDEU model makes it possible to take into account the way economic agents perceive the risk of being sick in the future. We first exhibit the condition under which the level of prevention chosen by the agent is higher or lower than the first best level. Then, we determine the optimal level of preventive co-payment rate which implements the first best level of prevention.

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P78.pdf
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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 29 (2009)
    Issue (Month): 3 ()
    Pages: 2333-2342

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    Handle: RePEc:ebl:ecbull:eb-09-00141

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    Related research

    Keywords: Prevention; Co-payment rate; Rank-Dependent Expected-Utility;

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    1. Shin-Yi Chou & Michael Grossman & Henry Saffer, 2002. "An Economic Analysis of Adult Obesity: Results from the Behavioral Risk Factor Surveillance System," NBER Working Papers 9247, National Bureau of Economic Research, Inc.
    2. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
    3. Chateauneuf, Alain & Cohen, Michele, 1994. "Risk Seeking with Diminishing Marginal Utility in a Non-expected Utility Model," Journal of Risk and Uncertainty, Springer, vol. 9(1), pages 77-91, July.
    4. Kai A. Konrad & Stergios Skaperdas, 1993. "Self-Insurance and Self-Protection: A Nonexpected Utility Analysis," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 18(2), pages 131-146, December.
    5. W. Kip Viscusi, 1995. "Government Action, Biases in Risk Perception, and Insurance Decisions," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 20(1), pages 93-110, June.
    6. Sandmo, Agnar, 1983. "Ex Post Welfare Economics and the Theory of Merit Goods," Economica, London School of Economics and Political Science, vol. 50(197), pages 19-33, February.
    7. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
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