Take-up for genetic tests and ambiguity

Michael Hoy, Richard Peter () and Andreas Richter ()

Journal of Risk and Uncertainty, 2014, vol. 48, issue 2, 133 pages

Abstract: Under the expected utility hypothesis a costless genetic test has, at worst, zero private value. This happens if it does not affect optimal decisions. If the genetic test facilitates better decision-making for at least one possible test outcome, then it has positive private value. This theoretical result seems to contradict the fact that empirically observed take-up rates for genetic tests are surprisingly low. We demonstrate that if individuals display ambiguity aversion, a costless genetic test that does not affect optimal decisions is never taken. Furthermore, there is a trade-off between aversion against uncertainty of test results and utility gains from better decision-making if optimal decisions depend on the level of information. The reason is that, from an ex-ante view, a genetic test introduces uncertainty of probabilities which diminishes the value of information to an ambiguity-averse decision-maker. Ambiguity aversion regarding test results thus provides an explanation for low take-up rates for genetic tests. Copyright Springer Science+Business Media New York 2014

Keywords: Non-expected utility; Ambiguity; Genetic tests; Value of information; D81; D83; I12 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (47)

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DOI: 10.1007/s11166-014-9186-z

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