The influence of the ratio bias phenomenon on the elicitation of health states utilities
This paper tests whether logically equivalent risk formats can lead to different health state utilities elicited by means of the traditional standard gamble (SG) method and a modified version of the method that we call ``double lottery.'' We compare utilities for health states elicited when probabilities are framed in terms of frequencies with respect to 100 people in the population (i.e., X out of 100 who follow a medical treatment will die) with SG utilities elicited for frequencies with respect to 1,000 people in the population (i.e., Y out of 1,000 who follow a medical treatment will die). We found that people accepted a lower risk of death when success and failure probabilities were framed as frequencies type ``Y deaths out of 1,000'' rather than as frequencies type ``X deaths out of 100'' and hence the utilities for health outcomes were higher when the denominator was 1000 than when it was 100. This framing effect, known as Ratio Bias, may have important consequences in resource allocation decisions.
Volume (Year): 1 (2006)
Issue (Month): (November)
|Contact details of provider:|| |
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.:
- José-Luis Pinto-Prades & José-María Abellán-Perpiñán, 2005.
"Measuring the health of populations: the veil of ignorance approach,"
John Wiley & Sons, Ltd., vol. 14(1), pages 69-82.
- José-Luis Pinto-Prades & José-María Abellán-Perpiñán, 2004. "Mesuring the Health of Populations: The Veil of Ignorance Approach," Working Papers 116, Barcelona Graduate School of Economics.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Bleichrodt, Han, 2001. "Probability Weighting in Choice under Risk: An Empirical Test," Journal of Risk and Uncertainty, Springer, vol. 23(2), pages 185-198, September. Full references (including those not matched with items on IDEAS)