6. Healthy decision making

Question 1

standard gamble

Answer 1

stay sick or intervention with chance of death or healthy life for the same time as you would be sick

Question 2

time trade-off

Answer 2

would you prefer living long but sick / short but healthy

quality of life = years in perfect health / years with impaired health state

the lower this ration, hence the worse the impaired health state, the greater is the reduction in years in perfect health that people would be willing to accept.

Question 3

health decision-making

Answer 3

making trade-offs now, which can affect our health (decades from now): risk and time preferences.

Question 4

medical decision-making when ill

Answer 4

quality of life years (QALY)

choosing between treatment options with different risk-reward trade-offs

Question 5

health utility index

Answer 5

expected utility as a cornerstone for medical decision making

Question 6

measuring quality of life

Answer 6

time trade-off / standard gamble / healthy years equivalent

Question 7

criticism medical decision-making

Answer 7

no acknowledgement of economic theory, to be precise: utility, probability weighting and loss aversion in medical decision making

Question 8

From value to utility

Answer 8

utility can be different for anybody. People maximize utility, not value.

how much utility you gain from additional x depends on initial wealth w = u (w + x )

Question 9

risk seeking

Answer 9

if you prefer the gamble

Question 10

risk averse

Answer 10

if you prefer the sure option

Question 11

risk neutral

Answer 11

if you are indifferent

Question 12

common finding

Answer 12

simultaneously optimism and risk seeking as well as pessimism and risk aversion.

this is a co-existence of gambling and insurance

Question 13

prospect theory

Answer 13

Prospect Theory: probability weighting (π) and reference point / loss aversion (λ).

Question 14

fourfold pattern prospect theory

Answer 14

1. risk aversion for moderate- and high probability gains
2. risk seeking for moderate- and high probability losses
3. risk seeking for small probability gains
4. risk aversion for small probability losses

Question 15

time trade off and utility / loss aversion

Answer 15

No utility consideration: utility is linear instead of concave: overweighting of long live durations relative to short life duration.

Due to loss aversion, highlighting here the life duration given up, reduces the above.

so loss aversion solves the overweighting of long live durations

Question 16

standard gamble and utility / loss aversion

Answer 16

Utility is accounted for

Probability weighting: underweighting of the good-outcome probability.

Loss aversion, so paying more attention to the death scenario, this worsens the evaluation of the gamble.

Question 17

summary healthy decision making

Answer 17

medical decision-making: quality of life and risk-reward trade-offs in treatment options = time trade-off method and standard gamble

Economic theory = prospect theory included two additional parameters: probability weighting and loss aversion.

Evaluating the time trade-off method and the standard gamble= time trade-off is the best option.

Question 18

Probability weighting

Answer 18

The tendency for individuals to over-weight low probability events, while also under-weighting high probability outcomes