Preference updating in public health risk valuation

Mehmet Kutluay, Roy Brouwer () and Richard Tol

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: Willingness to pay (WTP) for malaria pills, in light of new risk information and probability weighting, is estimated via a discrete choice experiment (CE). A lottery played prior to the CE yields individual-level probability weighting parameters through Bayesian inference. Over-reaction to new malaria risk information is found as marginal WTP for malaria protection increases by 20-33%. The probability weighting parameter helps to explain the observed variation in malaria valuation, while over or under-weighting of probabilities is found to be correlated with malaria knowledge and experience. This is independent of whether or not the information treatment is received. Over-reaction to new information uncovers potential biases, possibly from simply reminding people about being sick, in placing a monetary value on avoiding uncertain public health risks.

Keywords: probability weighting; malaria; valuation; information shock; Bayesian inference (search for similar items in EconPapers)
JEL-codes: D83 D90 I12 I18 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-dcm, nep-hea and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sussex.ac.uk/economics/documents/wps-15-2017.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:1517

Access Statistics for this paper

More papers in Working Paper Series from Department of Economics, University of Sussex Business School Contact information at EDIRC.
Bibliographic data for series maintained by University of Sussex Business School Communications Team ().