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Risk Attitude in Gambles with Years of Life

Author

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  • Lia C.G. Verhoef
  • Anton F.J. De Haan
  • Willem A.J. Van Daal

Abstract

According to prospect theory, risk attitude changes depending on whether a prospect is perceived as a gain or a loss relative to a reference or aspiration level. To investigate risk attitude with respect to years of life, the authors elicited utilities at two occasions by the certainty equivalent method from 30 women from the general population. The respondents gave certainty equivalents to gambles with years of life. The gambles were two-outcome gambles with equal probabilities to experience each outcome. A shift from a risk-seeking towards a risk-averse attitude was observed with increasing expected value of the gambles. For each individual, the averaged responses over the two replications were fitted with an s- shaped logistic curve that showed an excellent fit (r 2 ≥ 0.97) for all respondents. The aspiration level of survival can be derived from this function and was negatively correlated with age (r = -0.43, p

Suggested Citation

  • Lia C.G. Verhoef & Anton F.J. De Haan & Willem A.J. Van Daal, 1994. "Risk Attitude in Gambles with Years of Life," Medical Decision Making, , vol. 14(2), pages 194-200, April.
    • Handle: RePEc:sae:medema:v:14:y:1994:i:2:p:194-200
    DOI: 10.1177/0272989X9401400213
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    Cited by:

    1. Anna Conte & Peter G. Moffatt & Mary Riddel, 2015. "Heterogeneity in risk attitudes across domains: A bivariate random preference approach," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 15-10, School of Economics, University of East Anglia, Norwich, UK..
    2. Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier, 2013. "Prospect theory in the health domain: A quantitative assessment," Journal of Health Economics, Elsevier, vol. 32(6), pages 1057-1065.
    3. Joseph G Eisenhauer, 2012. "Measuring Aversion to Health Risks," Journal of Economics and Behavioral Studies, AMH International, vol. 4(2), pages 96-107.
    4. Ryan Edwards, 2013. "The cost of uncertain life span," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1485-1522, October.
    5. Foster, Gigi & Frijters, Paul & Johnston, David W., 2012. "The triumph of hope over disappointment: A note on the utility value of good health expectations," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 206-214.
    6. Alejandro Arrieta & Ariadna García‐Prado & Paula González & José Luis Pinto‐Prades, 2017. "Risk attitudes in medical decisions for others: An experimental approach," Health Economics, John Wiley & Sons, Ltd., vol. 26(S3), pages 97-113, December.
    7. Doctor, Jason N. & Bleichrodt, Han & Miyamoto, John & Temkin, Nancy R. & Dikmen, Sureyya, 2004. "A new and more robust test of QALYs," Journal of Health Economics, Elsevier, vol. 23(2), pages 353-367, March.
    8. Jonathan R. Treadwell & Leslie A. Lenert, 1999. "Health Values and Prospect Theory," Medical Decision Making, , vol. 19(3), pages 344-352, August.
    9. Michael Happich & Axel Muehlbacher, 2003. "An exponential representation of health state utility," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 4(4), pages 292-294, December.
    10. Han Bleichrodt & Jose Luis Pinto, 2012. "Conceptual Foundations for Health Utility Measurement," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 35, Edward Elgar Publishing.
    11. Lipman, Stefan A. & Brouwer, Werner B.F. & Attema, Arthur E., 2020. "Living up to expectations: Experimental tests of subjective life expectancy as reference point in time trade-off and standard gamble," Journal of Health Economics, Elsevier, vol. 71(C).
    12. Schosser, Stephan & Trarbach, Judith N. & Vogt, Bodo, 2016. "How does the perception of pain determine the selection between different treatments?," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 174-182.
    13. James K. Hammitt, 2002. "QALYs Versus WTP," Risk Analysis, John Wiley & Sons, vol. 22(5), pages 985-1001, October.
    14. Han Bleichrodt, 2002. "A new explanation for the difference between time trade‐off utilities and standard gamble utilities," Health Economics, John Wiley & Sons, Ltd., vol. 11(5), pages 447-456, July.
    15. José‐María Abellán‐Perpiñán & José‐Luis Pinto‐Prades & Ildefonso Méndez‐Martínez & Xabier Badía‐Llach, 2006. "Towards a better QALY model," Health Economics, John Wiley & Sons, Ltd., vol. 15(7), pages 665-676, July.
    16. van der Pol, Marjon & Ruggeri, Matteo, 2008. "Is risk attitude outcome specific within the health domain?," Journal of Health Economics, Elsevier, vol. 27(3), pages 706-717, May.
    17. Han Bleichrodt & José-Luis Pinto-Prades, 2004. "The Validity of QALYs Under Non-Expected Utility," Working Papers 113, Barcelona School of Economics.
    18. Adam Oliver & Richard Cookson, 2010. "Analysing risk attitudes to time," Health Economics, John Wiley & Sons, Ltd., vol. 19(6), pages 644-655, June.
    19. Valerie Seror, 2008. "Fitting observed and theoretical choices – women's choices about prenatal diagnosis of Down syndrome," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 557-577, May.
    20. Fagley, N. S. & Miller, Paul M., 1997. "Framing Effects and Arenas of Choice: Your Money or Your Life?," Organizational Behavior and Human Decision Processes, Elsevier, vol. 71(3), pages 355-373, September.
    21. Kristian Schultz Hansen & Lars Peter Østerdal, 2006. "Models of Quality‐Adjusted Life Years when Health Varies Over Time: Survey and Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 229-255, April.
    22. Gordon B. Hazen, 2007. "Adding Extrinsic Goals to the Quality-Adjusted Life Year Model," Decision Analysis, INFORMS, vol. 4(1), pages 3-16, March.

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