Willingness to pay for reductions in health risks when probabilities are distorted

Han Bleichrodt and Louis Eeckhoudt

Health Economics, 2006, vol. 15, issue 2, 211-214

Abstract: We study the willingness to pay for reductions in health risks when people do not evaluate probabilities linearly, as is commonly assumed in elicitations of willingness to pay, but weight probabilities, as is commonly observed in empirical studies of decision under risk. We show that for the levels of baseline risk typically considered, probability weighting strongly affects willingness to pay estimates and may lead to unstable monetary valuations of health. Copyright © 2005 John Wiley & Sons, Ltd.

Date: 2006
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Citations: View citations in EconPapers (33)

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https://doi.org/10.1002/hec.1073

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Working Paper: Willingness to pay for reductions in health risks when probabilities are distorted (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:15:y:2006:i:2:p:211-214

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