In this paper, we show a simple correction for the aggregation effect when testing the relationship between income inequality and life expectancy using aggregated data. While there is evidence for a negative correlation between income inequality and a population’s average life expectancy, it...

We study risk aversion and prudence in medical treatment decisions. In a laboratory experiment, we investigate the frequency and intensity of second- and third-order risk preferences, as well as the effect of the medical decision context. Risk preferences are assessed through treatment...

This textbook offers a comprehensive analysis of medical decision making under uncertainty by combining Test Information Theory with Expected Utility Theory. The book shows how the parameters of Bayes’ theorem can be combined with a value function of health states to arrive at informed test...

1 Introduction -- 2 Basic Tools in Medical Decision Making -- 3 Expected Utility, Risk Aversion and Prudence -- 4 Treatment Decisions Without Diagnostic Tests -- 5 Treatment Decisions with Diagnostic Tests -- 6 Treatment Decisions Under Comorbidity Risk -- 7 Optimal Strategy for Multiple...