An elicitation of utility for quality of life under prospect theory

Arthur E. Attema, Werner B.F. Brouwer, Olivier I'Haridon, Jose Luis Pinto Prades

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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.
Original languageEnglish
Pages (from-to)121-134
Number of pages14
JournalJournal of Health Economics
Volume48
Early online date2 May 2016
DOIs
Publication statusPublished - Jul 2016

Keywords

  • quality of life
  • prospect theory
  • health economics

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    Attema, A. E., Brouwer, W. B. F., I'Haridon, O., & Pinto Prades, J. L. (2016). An elicitation of utility for quality of life under prospect theory. Journal of Health Economics, 48, 121-134. https://doi.org/10.1016/j.jhealeco.2016.04.002