Reference-dependent discounting

Reference-dependence has become a widely established phenomenon in decision making under risk, not only for monetary outcomes but also for other outcomes, e.g., related to health. However, when the prospects involve risk about timing (the time of receipt of outcomes), rather than the outcomes themselves, much less is known about reference-dependence. This study extends discounted utility to incorporate reference-dependence and is the first to test it in timing prospects. We are also the first to estimate the probability weighting function for timing prospects. For both timing and outcome risk tasks, we replicate the typical fourfold pattern of risk attitudes: risk seeking for low-probability gains, risk aversion for high-probability gains, risk aversion for low-probability losses and risk seeking for high-probability losses. In other words, we find substantial pessimism with regard to high probabilities in the gain domain and low probabilities in the loss domain, and probabilistic optimism for low probabilities in the gain domain and high probabilities in the loss domain. Furthermore, we report loss aversion for outcome risks, while for timing risks, we find the opposite result, which we term earliness seeking. In sum, we find substantial empirical support for reference-dependent discounting. Our results show that psychological biases are also important when timing is risky, although the direction of bias may differ.</p

Constantly Proving The Opposite? A test of CPTO using a broad time horizon and correcting for discounting

Purpose: An important assumption underlying the quality-adjusted life year (QALY) model is that people trade off life years against health in the same proportion irrespective of the number of remaining life years. This is known as the constant proportional trade-offs (CPTO) condition. Previous studies have produced mixed empirical evidence about the validity of CPTO. This paper is the first to test CPTO using the time trade-off (TTO) method for a broad time horizon. Methods: In a sample of 83 students, we use a choice based TTO protocol to elicit TTO scores for back pain, using ten different gauge durations ranging between 1 and 46 years. The TTO scores are corrected for discounting, which is elicited by means of the direct method. Results: We find average TTO scores varying between 0.72 and 0.81. Although the scores do not differ much for different durations in absolute terms, some differences are significant, rejecting CPTO, with and without correcting for discounting. No clear relationship between TTO scores and gauge duration is found. An anchoring and rounding heuristic to some extent explains our results. Conclusions: Our findings highlight the importance of elicitation methods and context dependencies in QALY measurement and warrant detailed investigation of their influence

Altruism and the link to pro-social pandemic behavior

Funding Information: This project received funding from the Horizon 2020 Research and Innovation Programme of the European Union through the Marie Skłodowska-Curie Grant Agreement No. 721402 and was further funded by the German Research Foundation (DFG) funds from the Excellence Strategy of the University of Hamburg and other participating universities. Publisher Copyright: Copyright © 2022 Neumann-Böhme, Sabat and Attema.In the Corona pandemic, especially in the phase before vaccines were available, people's risk of infection with COVID-19 was dependent on the adherence to pandemic behaviors (e. g., wearing masks) of others around them. To explore whether altruistic individuals are more likely to engage in pro-social behaviors to protect others during the pandemic, we use data from the European COVID Survey (ECOS). The data was collected in September 2020 and consisted of a representative sample from seven European countries (N = 7,025). Altruism was measured as a deviation from purely self-interested behavior by asking respondents how much they would be willing to donate from an unexpected gain to the equivalent of 1000€. Respondents who were willing to donate more than 0 Euros (68.7%) were treated as altruistic; on average, respondents were willing to donate 11.7% (SD 17.9) of the gain. Controlling for country, sociodemographics, general risk aversion and COVID-specific risk aversion, we find that individuals classified as altruistic were more likely to behave pro-socially. More specifically, we find that altruistic respondents were more likely to wait at home for test results and wear a mask where it is recommended. They would also stay about 1 day longer under quarantine without symptoms after visiting a high-risk country and were less likely to go to a supermarket with COVID symptoms. We find no significant effect for wearing a mask in places where it is mandatory and for inviting more than six people into the house. Furthermore, we find that the subjective risk assessment of COVID-19 also plays a role in these behaviors. Our results support evidence from the literature that suggests that adherence to pro-social pandemic behaviors may be increased if public health officials emphasize the altruistic nature of these behaviors.publishersversionpublishe

Can Independently Elicited Adult- and Child-Perspective Health-State Utilities Explain Priority Setting?

Objectives: Time trade-off (TTO) utilities for EQ-5D-Y-3L health states valued by adults taking a child's perspective are generally higher than their valuations of the same state for themselves. Ceteris paribus, the use of these utilities in economic evaluation implies that children gain less from treatments returning them to full health for a specified amount of time than adults. In this study, we explore if this implication affects individuals’ views of priority-setting choices between treatments for adults and children. Methods: We elicited TTO utilities for 4 health states in online interviews, in which respondents valued states for a 10-year-old child and another adult their age. Views on priority setting were studied with person trade-off (PTO) tasks involving the same health states. We tested the ability of the subjects’ TTO utilities to predict these societal choices in PTO. Results: There are no significant differences between adult and child health state valuations in our study, but we do observe a substantial preference for treating children over adults in the PTO task. Conclusions: Our findings suggest that perspective-dependent health-state utilities only explain a small part of views on priority setting between adults and children. External equity weights might be useful to better explain the higher priority given to children.</p

INVESTMENT IN ANTIVIRAL DRUGS:A REAL OPTIONS APPROACH

Real options analysis is a promising approach to model investment under uncertainty. We employ this approach to value stockpiling of antiviral drugs as a precautionary measure against a possible influenza pandemic. Modifications of the real options approach to include risk attitude and deviations from expected utility are presented. We show that risk aversion counteracts the tendency to delay investment for this case of precautionary investment, which is in contrast to earlier applications of risk aversion to real options analysis. Moreover, we provide a numerical example using real world data and discuss the implications of real options analysis for health policy. Suggestions for further extensions of the model and a comparison with the expected value of information analysis are put forward. Copyright (C) 2009 John Wiley & Sons, Ltd

Correction to:Time and lexicographic preferences in the valuation of EQ-5D-Y with time trade-off methodology

The original article that was published contains errors in the abstract and result section head. Please find the corrected text with section heading.</p