ORCID: https://orcid.org/0000-0002-2588-4813
(2014):
Take-up for genetic tests and ambiguity.
In: Journal of Risk and Uncertainty, Vol. 48, No. 2: pp. 111-133
Abstract
Under the expected utility hypothesis a costless genetic test has, at worst, zero private value. This happens if it does not affect optimal decisions. If the genetic test facilitates better decision-making for at least one possible test outcome, then it has positive private value. This theoretical result seems to contradict the fact that empirically observed take-up rates for genetic tests are surprisingly low. We demonstrate that if individuals display ambiguity aversion, a costless genetic test that does not affect optimal decisions is never taken. Furthermore, there is a trade-off between aversion against uncertainty of test results and utility gains from better decision-making if optimal decisions depend on the level of information. The reason is that, from an ex-ante view, a genetic test introduces uncertainty of probabilities which diminishes the value of information to an ambiguity-averse decision-maker. Ambiguity aversion regarding test results thus provides an explanation for low take-up rates for genetic tests.
Item Type: | Journal article |
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Faculties: | Munich School of Management > Institute for Risk Management and Insurance |
Subjects: | 300 Social sciences > 330 Economics |
ISSN: | 0895-5646 |
Language: | English |
Item ID: | 95184 |
Date Deposited: | 22. Mar 2023, 06:24 |
Last Modified: | 22. Mar 2023, 06:24 |