Optimal sequential sampling rules for the economic evaluation of health technologies
AbstractReferring to the literature on optimal stopping under sequential sampling developed by Chernoff and collaborators, we solve a dynamic model of the economic evaluation of a new health technology, deriving optimal rules for technology adoption, research abandonment and continuation as functions of sample size. The model extends the existing literature to the case where an adoption decision can be deferred and involves a degree of irreversibility. We explore the model's applicability in a case study of the economic evaluation of Drug Eluting Stents (DES), deriving dynamic adoption and abandonment thresholds which are a function of the model's economic parameters. A key result is that referring to a single cost-effectiveness threshold may be sub-optimal.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 10/24.
Date of creation: Dec 2010
Date of revision:
Contact details of provider:
Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
Fax: (0)1904 323759
Web page: http://www.york.ac.uk/economics/
More information through EDIRC
Cost-effectiveness analysis; Sequential sampling; Dynamic programming;
Find related papers by JEL classification:
- I10 - Health, Education, and Welfare - - Health - - - General
- D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Financing, Investment, and Capacity
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-11 (All new papers)
- NEP-DGE-2010-12-11 (Dynamic General Equilibrium)
- NEP-HEA-2010-12-11 (Health Economics)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Hodgson).
If references are entirely missing, you can add them using this form.