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Breakdown of Will and the Value of Information

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  • Kuehn, Astrid
  • Wambach, Achim

Abstract

It is commonly observed that people refuse to obtain more detailed infor- mation about their health status, e. g. by not taking genetic tests, even if this information is costless and only disclosed to the individual. This observation is in contrast to the predictions of expected utility theory. We present a model that accounts for this phenomenon by using time- inconsistent preferences. It is shown that if people devise strategies against their inconsistency, which in line with the literature will be called will, then information about a serious illness might lead to a breakdown of will. In those cases information might have a negative value. We derive some comparative statistics results and provide empirical evidence.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3111.

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Date of creation: Dec 2001
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Handle: RePEc:cpr:ceprdp:3111

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Related research

Keywords: breakdown of will; genetic testing; hyperbolic discounting; time inconsistent preferences;

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Cited by:
  1. Michael Hoel & Tor Iversen & Tore Nilssen & Jon Vislie, 2004. "Genetic Testing and Repulsion from Chance," CESifo Working Paper Series 1181, CESifo Group Munich.
  2. Hoel, Michael & Iversen, Tor & Nilssen, Tore & Vislie, Jon, 2006. "Genetic testing in competitive insurance markets with repulsion from chance: A welfare analysis," Journal of Health Economics, Elsevier, vol. 25(5), pages 847-860, September.

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