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Choosing Treatment Policies Under Ambiguity

Author

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  • Charles F. Manski

    () (Department of Economics and Institute for Policy Research, Northwestern University, Evanston, Illinois 60208)

Abstract

Economists 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.

Suggested Citation

  • Charles F. Manski, 2011. "Choosing Treatment Policies Under Ambiguity," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 25-49, September.
  • Handle: RePEc:anr:reveco:v:3:y:2011:p:25-49
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-061109-080359
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Charles F. Manski, 2017. "Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise," NBER Chapters,in: NBER Macroeconomics Annual 2017, volume 32 National Bureau of Economic Research, Inc.
    2. Epstein, Larry G. & Seo, Kyoungwon, 2015. "Exchangeable capacities, parameters and incomplete theories," Journal of Economic Theory, Elsevier, pages 879-917.
    3. Berger, Loïc & Bleichrodt, Han & Eeckhoudt, Louis, 2013. "Treatment decisions under ambiguity," Journal of Health Economics, Elsevier, pages 559-569.
    4. Charles F. Manski, 2014. "Choosing Size of Government Under Ambiguity: Infrastructure Spending and Income Taxation," Economic Journal, Royal Economic Society, vol. 0(576), pages 359-376, May.
    5. Hahn, Jinyong & Ridder, Geert & Snider, Connan, 2013. "Partial identification and mergers," Economics Letters, Elsevier, pages 126-129.
    6. Dionissi Aliprantis, 2017. "Assessing the evidence on neighborhood effects from Moving to Opportunity," Empirical Economics, Springer, pages 925-954.
    7. Besley, Timothy J. & Mueller, Hannes Felix, 2015. "Volatility and Political Institutions: Theory and Application to Economic Growth," CEPR Discussion Papers 10374, C.E.P.R. Discussion Papers.
    8. Charles F. Manski, 2014. "Vaccine Approvals and Mandates Under Uncertainty: Some Simple Analytics," NBER Working Papers 20432, National Bureau of Economic Research, Inc.
    9. Nabil I. Al-Najjar & Luciano Pomatto, 2016. "Choice under aggregate uncertainty," Theory and Decision, Springer, pages 187-209.
    10. repec:bos:wpaper:wp2013-001 is not listed on IDEAS

    More about this item

    Keywords

    dominance; minimax regret; partial identification; planning; social choice; treatment response;

    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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