Quality-adjusted life-years (QALYs) are the most common utility measure in medical decision analysis and economic evaluations of health care. This paper presents an axiomatization of QALYs under cumulative prospect theory (CPT), currently the most influential model for decision under uncertainty. Because the set of health states need not be endowed with a natural topology that is connected, we first show how existing CPT characterizations can be extended to a class of outcome sets for which no connected natural topology is given. We then characterize QALY models with linear, power, and exponential utility for duration. Finally, we define loss aversion for multiattribute utility theory and characterize the QALY models under general and constant loss aversion. The measurement of QALYs belongs to the general field of multiattribute utility theory. Hence, our results can be generalized to other multiattribute decision contexts and they thereby contribute to the development of multiattribute utility theory under cumulative prospect theory.

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Mathematics of Operations Research
Erasmus School of Economics

Bleichrodt, H., & Miyamoto, J. (2003). A Characterization of Quality-Adjusted Life-Years under Cumulative Prospect Theory. Mathematics of Operations Research. Retrieved from http://hdl.handle.net/1765/10995