An elicitation of utility for quality of life under prospect theory

Arthur Attema, Werner Brouwer, Olivier L’haridon (olivier.lharidon@univ-rennes1.fr) and Jose Luis Pinto
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Olivier L’haridon: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique
Jose Luis Pinto: Yunus Centre for Social Business & Health - GCU - Glasgow Caledonian University, Department of Economics - University of Navarra
Authors registered in the RePEc Author Service: Olivier L'Haridon

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Abstract: This paper performs several tests of decision analysis applied to the health domain. First, we conduct a test of the normative expected utility theory. Second, we investigate the possibility to elicit the more general prospect theory. We observe risk aversion for gains and losses and violations of expected utility. These results imply that mechanisms governing decisions in the health domain are similar to those in the monetary domain. However, we also report one important deviation: utility is universally concave for the health outcomes used in this study, in contrast to the commonly found S-shaped utility for monetary outcomes, with concave utility for gains and convex utility for losses.

Keywords: Certainty equivalences; Loss aversion; Prospect theory; QALYs; Utility function (search for similar items in EconPapers)
Date: 2016-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01354117
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Citations: View citations in EconPapers (30)

Published in Journal of Health Economics, 2016, 48, pp.121-134. ⟨10.1016/j.jhealeco.2016.04.002⟩

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Journal Article: An elicitation of utility for quality of life under prospect theory (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01354117

DOI: 10.1016/j.jhealeco.2016.04.002

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