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An elicitation of utility for quality of life under prospect theory

Arthur Attema, Werner Brouwer (), l’Haridon, Olivier and Jose Luis Pinto
Authors registered in the RePEc Author Service: Olivier l'Haridon

Journal of Health Economics, 2016, vol. 48, issue C, 121-134

Abstract: This paper performs several tests of decision analysis applied to the health domain. First, we conduct a test of the normative expected utility theory. Second, we investigate the possibility to elicit the more general prospect theory. We observe risk aversion for gains and losses and violations of expected utility. These results imply that mechanisms governing decisions in the health domain are similar to those in the monetary domain. However, we also report one important deviation: utility is universally concave for the health outcomes used in this study, in contrast to the commonly found S-shaped utility for monetary outcomes, with concave utility for gains and convex utility for losses.

Keywords: Certainty equivalences; Loss aversion; Prospect theory; QALYs; Utility function (search for similar items in EconPapers)
JEL-codes: I10 (search for similar items in EconPapers)
Date: 2016
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Working Paper: An elicitation of utility for quality of life under prospect theory (2016)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:jhecon:v:48:y:2016:i:c:p:121-134

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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