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Preference updating in public health risk valuation

Mehmet Kutluay, Roy Brouwer () and Richard Tol ()

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: Willingness to pay (WTP) for malaria pills, in light of new risk information and probability weighting, is estimated via a discrete choice experiment (CE). A lottery played prior to the CE yields individual-level probability weighting parameters through Bayesian inference. Over-reaction to new malaria risk information is found as marginal WTP for malaria protection increases by 20-33%. The probability weighting parameter helps to explain the observed variation in malaria valuation, while over or under-weighting of probabilities is found to be correlated with malaria knowledge and experience. This is independent of whether or not the information treatment is received. Over-reaction to new information uncovers potential biases, possibly from simply reminding people about being sick, in placing a monetary value on avoiding uncertain public health risks.

Keywords: probability weighting; malaria; valuation; information shock; Bayesian inference (search for similar items in EconPapers)
JEL-codes: D83 D90 I12 I18 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-dcm, nep-hea and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:1517

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