Microsimulation Estimates of Decision Uncertainty and Value of Information Are Biased but Consistent

Jeremy D. Goldhaber-Fiebert, Hawre Jalal and Fernando Alarid-Escudero
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Jeremy D. Goldhaber-Fiebert: Department of Health Policy, Stanford School of Medicine, Stanford, CA, USA
Hawre Jalal: School of Epidemiology and Public Health, University of Ottawa, Ottawa, ON, Canada
Fernando Alarid-Escudero: Department of Health Policy, Stanford School of Medicine, Stanford, CA, USA

Medical Decision Making, 2025, vol. 45, issue 2, 127-142

Abstract: Purpose Individual-level state-transition microsimulations (iSTMs) have proliferated for economic evaluations in place of cohort state transition models (cSTMs). Probabilistic economic evaluations quantify decision uncertainty and value of information (VOI). Previous studies show that iSTMs provide unbiased estimates of expected incremental net monetary benefits (EINMB), but statistical properties of iSTM-produced estimates of decision uncertainty and VOI remain uncharacterized. Methods We compare iSTM-produced estimates of decision uncertainty and VOI to corresponding cSTMs. For a 2-alternative decision and normally distributed incremental costs and benefits, we derive analytical expressions for the probability of being cost-effective and the expected value of perfect information (EVPI) for cSTMs and iSTMs, accounting for correlations in incremental outcomes at the population and individual levels. We use numerical simulations to illustrate our findings and explore the impact of relaxing normality assumptions or having >2 decision alternatives. Results iSTM estimates of decision uncertainty and VOI are biased but asymptotically consistent (i.e., bias approaches 0 as number of microsimulated individuals approaches infinity). Decision uncertainty depends on 1 tail of the INMB distribution (e.g., P[INMB

Keywords: bias; consistency; cost-effectiveness acceptability curve; decision uncertainty; microsimulation; Monte Carlo; probabilistic analysis; sampling; value of information (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:medema:v:45:y:2025:i:2:p:127-142

DOI: 10.1177/0272989X241305414

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