Irreversible Indifference Curves, Reference Points, and the Practice of Eliciting Preferences from the Public

Gwendolyn C Morrison

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: Over the last decade, evidence has accumulated in the mainstream economics literature indicating that, contrary to economic theory, indifference curves are irreversible. The methods in question - willingness to pay versus willingness to accept and standard gamble versus certainty equivalence - are frequently used by health economists. Clearly, these findings raise doubts about the results obtained using these methods. The purpose of this paper is, first, to bring such discrepancies to the attention of the health economists that employ these methods (or the health status indices obtained from these methods), and then to address some implications that these findings have on the practices of eliciting preferences regarding health and health care from the public.

Keywords: willingness to pay; willingness to accept; standard gamble; certainty equivalent; indifference curves (search for similar items in EconPapers)
JEL-codes: D6 D8 I1 (search for similar items in EconPapers)
Date: 1995-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9502

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