The internal consistency of the standard gamble: tests after adjusting for prospect theory.

Full Abstract

This article reports a study that tests whether the internal consistency of the standard gamble can be improved upon by incorporating loss weighting and probability transformation parameters in the standard gamble valuation procedure. Five alternatives to the standard EU formulation are considered:
(1) probability transformation within an EU framework; and, within a prospect theory framework, (2) loss weighting and full probability transformation, (3) no loss weighting and full probability transformation, (4) loss weighting and no probability transformation, and (5) loss weighting and partial probability transformation. Of the five alternatives, only the prospect theory formulation with loss weighting and no probability transformation offers an improvement in internal consistency over the standard EU valuation procedure.

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Author information

Author/s: Oliver, Adam (A);

Affiliation: LSE Health and Social Care, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, UK. a.j.oliver(-atsign-)lse.ac.uk

Journal and publication information

Publication Type: Journal Article; Research Support, Non-U.S. Gov't

Journal: Journal of health economics (J Health Econ), published in Netherlands. (Language: eng)

Reference: 2003-Jul; vol 22 (issue 4) : pp 659-74

Dates: Created 2003/07/04; Completed 2003/08/12; Revised 2007/11/15;

PMID: 12842320, status: MEDLINE (last retrieval date: 11/6/2008)

Sourced from the National Library of Medicine. Abstract text and other information may be subject to copyright.

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MeSH headings (categories)

This article was linked to the MESH Headings shown below.

London
Male
Models, Statistical
Probability
Research Design
Risk Assessment - statistics & numerical data
Students - psychology
Treatment Failure
Treatment Outcome
Value of Life

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