Risk aversion and the value of diagnostic tests
Diagnostic tests allow better informed medical decisions when there is uncertainty about a patient’s health status and, therefore, about the desirability to undertake treatment. This paper studies the relation between the expected value of diagnostic information and a patient's risk aversion. We show that the ex ante value of diagnostic information increases with risk aversion for diseases with low prevalence, but decreases with risk aversion for diseases with high prevalence. On the other hand, the ex post value of diagnostic information always increases with the patient's degree of risk aversion.
|Keywords||Diagnostic risks, Diagnostic tests, Risk aversion, Value of information|
|Persistent URL||dx.doi.org/10.1007/s11238-020-09750-8, hdl.handle.net/1765/125326|
|Journal||Theory and Decision: an international journal for multidisciplinary advances in decision sciences|
Bleichrodt, H, Crainich, D, Eeckhoudt, L, & Treich, N. (Nicolas). (2020). Risk aversion and the value of diagnostic tests. Theory and Decision: an international journal for multidisciplinary advances in decision sciences. doi:10.1007/s11238-020-09750-8