Valuations of Ambiguity in Prescription Drug Risks : Evidence by Framing and Risk Type

Prescription drug use is a risky endeavor. These risks are rarely precisely known, and patients may react to this ambiguity in unpredictable ways. Patient perceptions of ambiguous drug risks are difficult to elicit from market data. This paper uses an incentivized experiment to explore the effect of ambiguity on perceptions of different risks in the presence of framing effects. The experiment finds that consumers are ambiguity seeking in the “loss domain” and ambiguity-averse in the “gains domain.” Additionally, in the loss domain, there are significant differences between the attitudes toward ambiguity in the risk that a drug is ineffective and the risk that a drug is unsafe. These deviations from ambiguity neutrality suggest that techniques to reduce perceived ambiguity or to synthesize ambiguous results for patients may result in better patient outcomes