The predictive validity of prospect theory versus expected utility in health utility measurement

Jose Maria Abellan-Perpinan, Han Bleichrodt, Jose Luis Pinto Prades

Research output: Contribution to journalArticlepeer-review

Abstract

Most health care evaluations today still assume expected utility even though the descriptive deficiencies of expected utility are well known. Prospect theory is the dominant descriptive alternative for expected utility. This paper tests whether prospect theory leads to better health evaluations than expected utility. The approach is purely descriptive: we explore how simple measurements together with prospect theory and expected utility predict choices and rankings between more complex stimuli. For decisions involving risk prospect theory is significantly more consistent with rankings and choices than expected utility.
Original languageEnglish
Pages (from-to)1039-1047
Number of pages9
JournalJournal of Health Economics
Volume28
Issue number6
Early online date20 Sep 2009
DOIs
Publication statusPublished - Dec 2009

Keywords

  • prospect theory
  • expected utility
  • health utility measurement
  • health evaluations

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