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:|| |
References listed on IDEAS
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.:
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
- Bleichrodt, Han, 2001. "Probability Weighting in Choice under Risk: An Empirical Test," Journal of Risk and Uncertainty, Springer, vol. 23(2), pages 185-98, September.
- 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.
When requesting a correction, please mention this item's handle: RePEc:jdm:journl:v:1:y:2006:i::p:118-133. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Baron)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.