Oct 15, 2018
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Decisions under ambiguity

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In health care, decisions are always made with imperfect information.  How ambiguity affects stakeholder decisionmaking and in particular how ambiguity interacts with risk preferences to affect decisions is unknown.  A paper by Attema, Bleichrodt and L’Haridon (2018) aims to answer this question using a general ambiguity model.  They find that:

For health gains, ambiguity preferences and risk preferences were indeed the same. For health losses, they differed with subjects being more pessimistic in decision under ambiguity. Utility and loss aversion were the same for risk and ambiguity. Our results imply that reducing the clinical ambiguity of health losses has more impact than reducing the ambiguity of health gains, that utilities elicited with known probabilities may not carry over to an ambiguous setting, and that ambiguity aversion may impact value of information analyses if losses are involved.

 

 



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