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Patient Preferences and Treatment Thresholds under Diagnostic Risk – An Economic Laboratory Experiment

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  • Krieger, Miriam
  • Mayrhofer, Thomas

Abstract

We study risk aversion and prudence in medical treatment decisions. In a laboratory experiment, we investigate the frequency and intensity of second- and third-order risk preferences, as well as the effect of the medical decision context. Risk preferences are assessed through treatment thresholds (the indifference point between not treating and treating). Under diagnostic risk, medical decision theory predicts lower thresholds for risk-averse than risk-neutral decision makers. Given a comorbidity risk, prudent individuals have an even lower threshold. Our results demonstrate risk-averse and prudent behavior in medical decisions, which reduce the (average) treatment threshold by 41% relative to risk neutrality (from 50.0% to 29.3% prevalence rate). Risk aversion accounts for 3/4 of this effect, prudence for 1/4. The medical decision framing does not affect risk aversion, but is associated with more and stronger prudent behavior. These findings have consequences for treatment thresholds, diagnostics, and QALYs, and thus for clinical guidelines.

Suggested Citation

  • Krieger, Miriam & Mayrhofer, Thomas, 2012. "Patient Preferences and Treatment Thresholds under Diagnostic Risk – An Economic Laboratory Experiment," Ruhr Economic Papers 321, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:321
    DOI: 10.4419/86788370
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    Cited by:

    1. Timo Heinrich & Thomas Mayrhofer, 2018. "Higher-order risk preferences in social settings," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 434-456, June.
    2. Arthur E. Attema & Olivier L’Haridon & Gijs Kuilen, 2023. "An experimental investigation of social risk preferences for health," Theory and Decision, Springer, vol. 95(3), pages 379-403, October.
    3. repec:zbw:rwirep:0508 is not listed on IDEAS
    4. Attema, Arthur E. & l’Haridon, Olivier & van de Kuilen, Gijs, 2019. "Measuring multivariate risk preferences in the health domain," Journal of Health Economics, Elsevier, vol. 64(C), pages 15-24.
    5. Thomas Mayrhofer & Hendrik Schmitz, 2020. "Prudence and prevention - Empirical evidence," Working Papers CIE 134, Paderborn University, CIE Center for International Economics.
    6. Arthur E. Attema & Jona J. Frasch & Olivier L’Haridon, 2022. "Multivariate risk preferences in the quality‐adjusted life year model," Health Economics, John Wiley & Sons, Ltd., vol. 31(2), pages 382-398, February.
    7. Mulligan, Karen & Baid, Drishti & Doctor, Jason N. & Phelps, Charles E. & Lakdawalla, Darius N., 2024. "Risk preferences over health: Empirical estimates and implications for medical decision-making," Journal of Health Economics, Elsevier, vol. 94(C).
    8. Timo Heinrich & Jason Shachat, 2020. "The development of risk aversion and prudence in Chinese children and adolescents," Journal of Risk and Uncertainty, Springer, vol. 61(3), pages 263-287, December.
    9. Attema, Arthur & Frasch, Jona & L'Haridon, Olivier, 2020. "Multivariate risk preferences in the QALY model," MPRA Paper 103339, University Library of Munich, Germany.
    10. Yves Arrighi & David Crainich & Véronique Flambard & Sophie Massin, 2022. "Personalized information and willingness to pay for non-financial risk prevention: An experiment," Journal of Risk and Uncertainty, Springer, vol. 65(1), pages 57-82, August.
    11. Murong Yang & Laurence S. J. Roope & James Buchanan & Arthur E. Attema & Philip M. Clarke & A. Sarah Walker & Sarah Wordsworth, 2022. "Eliciting risk preferences that predict risky health behavior: A comparison of two approaches," Health Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 836-858, May.
    12. Thomas Mayrhofer, 2017. "Skewed background risks and higher-order risk preferences: prudent versus temperate behavior," Applied Economics Letters, Taylor & Francis Journals, vol. 24(5), pages 338-341, March.
    13. Stefan Felder & Thomas Mayrhofer, 2018. "Threshold analysis in the presence of both the diagnostic and the therapeutic risk," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(7), pages 1019-1026, September.
    14. Schneider, Sebastian O. & Sutter, Matthias, 2020. "Higher Order Risk Preferences: Experimental Measures, Determinants and Related Field Behavior," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224643, Verein für Socialpolitik / German Economic Association.
    15. Timo Heinrich & Thomas Mayrhofer, 2014. "Higher-order Risk Preferences in Social Settings - An Experimental Analysis," Ruhr Economic Papers 0508, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    16. Stephen G. Pauker, 2014. "Moments When Utilities Are Functional," Medical Decision Making, , vol. 34(1), pages 4-7, January.
    17. Stefan Felder & Thomas Mayrhofer, 2014. "Risk Preferences," Medical Decision Making, , vol. 34(1), pages 33-41, January.
    18. Heinrich, Timo & Mayrhofer, Thomas, 2014. "Higher-order Risk Preferences in Social Settings - An Experimental Analysis," Ruhr Economic Papers 508, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    Medical decision making; treatment thresholds; risk aversion; prudence; laboratory experiment;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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