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Can Prospect Theory Explain Risk-Seeking Behavior by Terminally Ill Patients?

Author

Listed:
  • Emma B. Rasiel

    (Center for Clinical and Genetic Economics, Duke Clinical Research Institute, Duke University Medical Center, Durham, NC, Department of Economics, Duke University, Durham, NC)

  • Kevin P. Weinfurt

    (Center for Clinical and Genetic Economics, Duke Clinical Research Institute, Duke University Medical Center, Durham, NC)

  • Kevin A. Schulman

    (Center for Clinical and Genetic Economics, Duke Clinical Research Institute, Duke University Medical Center, Durham, NC, kevin.schulman@duke.edu)

Abstract

Patients with life-threatening conditions sometimes appear to make risky treatment decisions as their condition declines, contradicting the risk-averse behavior predicted by expected utility theory. Prospect theory accommodates such decisions by describing how individuals evaluate outcomes relative to a reference point and how they exhibit risk-seeking behavior over losses relative to that point. The authors show that a patient’s reference point for his or her health is a key factor in determining which treatment option the patient selects, and they examine under what circumstances the more risky option is selected. The authors argue that patients’ reference points may take time to adjust following a change in diagnosis, with implications for predicting under what circumstances a patient may select experimental or conventional therapies or select no treatment.

Suggested Citation

  • Emma B. Rasiel & Kevin P. Weinfurt & Kevin A. Schulman, 2005. "Can Prospect Theory Explain Risk-Seeking Behavior by Terminally Ill Patients?," Medical Decision Making, , vol. 25(6), pages 609-613, November.
    • Handle: RePEc:sae:medema:v:25:y:2005:i:6:p:609-613
    DOI: 10.1177/0272989X05282642
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    Citations

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    Cited by:

    1. Tomas J. Philipson & Gary Becker & Dana Goldman & Kevin M. Murphy, 2010. "Terminal Care and The Value of Life Near Its End," NBER Working Papers 15649, National Bureau of Economic Research, Inc.
    2. Sean Murphy & Robert Rosenman & Jonathan Yoder & Daniel Friesner, 2011. "Patients' perceptions and treatment effectiveness," Applied Economics, Taylor & Francis Journals, vol. 43(24), pages 3275-3288.
    3. Bengt Jönsson & Grace Hampson & Jonathan Michaels & Adrian Towse & J.-Matthias Graf Schulenburg & Olivier Wong, 2019. "Advanced therapy medicinal products and health technology assessment principles and practices for value-based and sustainable healthcare," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(3), pages 427-438, April.
    4. Elodie Adida, 2021. "Outcome-Based Pricing for New Pharmaceuticals via Rebates," Management Science, INFORMS, vol. 67(2), pages 892-913, February.
    5. Gary Becker & Kevin Murphy & Tomas Philipson, 2007. "The Value of Life Near its End and Terminal Care," Levine's Working Paper Archive 122247000000001428, David K. Levine.

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