Willingness to pay for reductions in health risks under anticipated regret

Jiakun Zheng
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Jiakun Zheng: Renmin University of China = Université Renmin de Chine, China Financial Policy Research Center - Renmin University of China = Université Renmin de Chine

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Abstract: In this paper, we study the willingness to pay for reductions in health risks within a framework of anticipated regret. We show that ex post information provision can be a relevant factor for regret theory to account for why people are sometimes so inclined to protect themself against certain types of health risks but not others. In particular, we find that under full resolution of uncertainty disproportionate aversion to large regrets exaggerates willingness to pay estimates. The effect induced by this notion of regret aversion can be interpreted as if regret-averse people overweight risk reductions due to prevention. However, as feedback over forgone acts is missing, the regret aversion effect disappears. Finally, we show that information avoidance induced by regret aversion can significantly bias our evaluation to prefer those health programs that completely eliminate a risk, i.e., the certainty effect.

Keywords: Regret aversion; Willingness to pay; Probability weighting; Health policy; Cost-benefit analysis; Information avoidance (search for similar items in EconPapers)
Date: 2021-07
Note: View the original document on HAL open archive server: https://hal.science/hal-04227414v1
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Citations: View citations in EconPapers (2)

Published in Journal of Health Economics, 2021, 78, pp.102476. ⟨10.1016/j.jhealeco.2021.102476⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04227414

DOI: 10.1016/j.jhealeco.2021.102476

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