IDEAS home Printed from https://ideas.repec.org/a/sae/medema/v17y1997i3p340-350.html
   My bibliography  Save this article

Incorporating Risk Attitude into Markov-process Decision Models:

Author

Listed:
  • Daniel J. Cher
  • John Miyamoto
  • Leslie A. Lenert

Abstract

Most decision models published in the medical literature take a risk-neutral perspective. Under risk neutrality, the utility of a gamble is equivalent to its expected value and the marginal utility of living a given unit of time is the same regardless of when it occurs. Most patients, however, are not risk-neutral. Not only does risk aversion affect decision analyses when tradeoffs between short- and long-term survival are involved, it also affects the interpretation of time-tradeoff measures of health-state utility. The proportional time tradeoff under- or overestimates the disutility of an inferior health state, depending on whether the patient is risk-seeking or risk-averse (it is unbiased if the patient is risk-neutral). The authors review how risk attitude with respect to gambles for survival duration can be incorporated into decision models using the framework of risk-adjusted quality-adjusted life years (RA-QALYs). They present a simple extension of this framework that allows RA-QALYs to be calculated for Markov-process decision models. Using a previously published Markov-process model of surgical vs expectant treatment for benign prostatic hypertrophy (BPH), they show how attitude towards risk affects the expected number of QALYs calculated by the model. In this model, under risk neutrality, surgery was the preferred option. Under mild risk aversion, expectant treatment was the preferred option. Risk attitude is an important aspect of preferences that should be incorporated into decision models where one treatment option has up-front risks of morbidity or mortality. Key words : risk attitude; Markov models; patient preferences; quality-adjusted life years. (Med Decis Making 1997;17:340-350)

Suggested Citation

  • Daniel J. Cher & John Miyamoto & Leslie A. Lenert, 1997. "Incorporating Risk Attitude into Markov-process Decision Models:," Medical Decision Making, , vol. 17(3), pages 340-350, July.
  • Handle: RePEc:sae:medema:v:17:y:1997:i:3:p:340-350
    DOI: 10.1177/0272989X9701700311
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0272989X9701700311
    Download Restriction: no

    File URL: https://libkey.io/10.1177/0272989X9701700311?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elamin H. Elbasha, 2022. "Cost‑Effectiveness Risk‑Aversion Curves: Comparison of Risk-Adjusted Performance Measures and Expected-Utility Approaches," PharmacoEconomics, Springer, vol. 40(5), pages 497-507, May.
    2. Han Bleichrodt & Jose Maria Abellan-Perpiñan & Jose Luis Pinto-Prades & Ildefonso Mendez-Martinez, 2007. "Resolving Inconsistencies in Utility Measurement Under Risk: Tests of Generalizations of Expected Utility," Management Science, INFORMS, vol. 53(3), pages 469-482, March.
    3. 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.
    4. Elamin H. Elbasha, 2005. "Risk aversion and uncertainty in cost‐effectiveness analysis: the expected‐utility, moment‐generating function approach," Health Economics, John Wiley & Sons, Ltd., vol. 14(5), pages 457-470, May.
    5. 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.
    6. 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.
    7. José Mª Abellán & José Luis Pinto & Ildefonso Méndez & Xabier Badía, 2004. "A test of the predictive validity of non-linear QALY models using time trade-off utilities," Economics Working Papers 741, Department of Economics and Business, Universitat Pompeu Fabra.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:medema:v:17:y:1997:i:3:p:340-350. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.