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Prospect theory in the health domain: A quantitative assessment

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  • Attema, Arthur E.
  • Brouwer, Werner B.F.
  • l’Haridon, Olivier

Abstract

It is well-known that expected utility (EU) has empirical deficiencies. Cumulative prospect theory (CPT) has developed as an alternative with more descriptive validity. However, CPT's full function had not yet been quantified in the health domain. This paper is therefore the first to simultaneously measure utility of life duration, probability weighting, and loss aversion in this domain.

Suggested Citation

  • Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier, 2013. "Prospect theory in the health domain: A quantitative assessment," Journal of Health Economics, Elsevier, vol. 32(6), pages 1057-1065.
  • Handle: RePEc:eee:jhecon:v:32:y:2013:i:6:p:1057-1065
    DOI: 10.1016/j.jhealeco.2013.08.006
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    More about this item

    Keywords

    Loss aversion; Cumulative prospect theory; QALY model; Utility of life duration;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • I10 - Health, Education, and Welfare - - Health - - - General

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