Willingness to Pay for Reductions in Health Risk When Probabilities Are Distorted
Health Economics , Volume 15 - Issue 2 p. 211- 214
We study the willingness to pay for reductions in health risks when people do not evaluate probabilities linearly, as is commonly assumed in elicitations of willingness to pay, but weight probabilities, as is commonly observed in empirical studies of decision under risk. We show that for the levels of baseline risk typically considered, probability weighting strongly affects willingness to pay estimates and may lead to unstable monetary valuations of health.
|Organisation||Erasmus School of Economics|
Bleichrodt, H, & Eeckhoudt, L. (2006). Willingness to Pay for Reductions in Health Risk When Probabilities Are Distorted. Health Economics, 15(2), 211–214. doi:10.1002/hec.1073