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When are person tradeoffs valid?

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Author Info

  • Doctor, Jason N.
  • Miyamoto, John
  • Bleichrodt, Han
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    Abstract

    The person tradeoff (PTO) is commonly used in health economic applications. However, to date it has no theoretical basis. The purpose of this paper is to provide this basis from a set of assumptions that together justify the most common applications of the PTO method. Our analysis identifies the central assumptions in PTO measurements. We test these assumptions in an experiment, but find only limited support for the validity of the PTO.

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    File URL: http://www.sciencedirect.com/science/article/B6V8K-4WM0J5W-1/2/8e4ccfbe10276902fde7e04996fed64e
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Health Economics.

    Volume (Year): 28 (2009)
    Issue (Month): 5 (September)
    Pages: 1018-1027

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    Handle: RePEc:eee:jhecon:v:28:y:2009:i:5:p:1018-1027

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    Web page: http://www.elsevier.com/locate/inca/505560

    Related research

    Keywords: Person tradeoff Utility theory Social welfare;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Paul Dolan & Colin Green, 1998. "Using the person trade-off approach to examine differences between individual and social values," Health Economics, John Wiley & Sons, Ltd., vol. 7(4), pages 307-312.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
    3. Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
    4. Han Bleichrodt & Jose Luis Pinto, 2000. "A Parameter-Free Elicitation of the Probability Weighting Function in Medical Decision Analysis," Management Science, INFORMS, vol. 46(11), pages 1485-1496, November.
    5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    6. Joshua A. Salomon & Christopher J.L. Murray, 2004. "A multi-method approach to measuring health-state valuations," Health Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 281-290.
    7. Erik Nord & Jose Luis Pinto & Jeff Richardson & Paul Menzel & Peter Ubel, 1999. "Incorporating societal concerns for fairness in numerical valuations of health programmes," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 25-39.
    8. Keeney,Ralph L. & Raiffa,Howard, 1993. "Decisions with Multiple Objectives," Cambridge Books, Cambridge University Press, number 9780521438834, November.
    9. Ballinger, T Parker & Wilcox, Nathaniel T, 1997. "Decisions, Error and Heterogeneity," Economic Journal, Royal Economic Society, vol. 107(443), pages 1090-1105, July.
    10. Baron, Jonathan & Ubel, Peter A., 2002. "Types of inconsistency in health-state utility judgments," Organizational Behavior and Human Decision Processes, Elsevier, vol. 89(2), pages 1100-1118, November.
    11. Paul Dolan & Aki Tsuchiya, 2003. "The person trade-off method and the transitivity principle: an example from preferences over age weighting," Health Economics, John Wiley & Sons, Ltd., vol. 12(6), pages 505-510.
    12. Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
    13. Bleichrodt, Han & Crainich, David & Eeckhoudt, Louis, 2008. "Aversion to health inequalities and priority setting in health care," Journal of Health Economics, Elsevier, vol. 27(6), pages 1594-1604, December.
    14. Jose-Luis Pinto Prades, 1997. "Is the Person Trade-off a Valid Method for Allocating Health Care Resources?," Health Economics, John Wiley & Sons, Ltd., vol. 6(1), pages 71-81.
    15. Loomes, Graham & Sugden, Robert, 1998. "Testing Different Stochastic Specifications of Risky Choice," Economica, London School of Economics and Political Science, vol. 65(260), pages 581-98, November.
    16. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
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    Cited by:
    1. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2012. "A new axiomatic approach to the evalution of population health," COHERE Working Paper 2012:3, COHERE - Centre of Health Economics Research, University of Southern Denmark.
    2. Erik Nord & Jose Luis Pinto & Jeff Richardson & Paul Menzel & Peter Ubel, 1999. "Incorporating societal concerns for fairness in numerical valuations of health programmes," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 25-39.

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