Prospect theory, reference points, and health decisions

Alan Schwartz*, Julie Goldberg, Gordon Hazen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

24 Scopus citations

Abstract

In preventative health decisions, such as the decision to undergo an invasive screening test or treatment, people may be deterred from selecting the test because its perceived disutility relative to not testing is greater than the utility associated with prevention of possible disease. The prospect theory editing operation, by which a decision maker's reference point is determined, can have important effects on the disutility of the test. On the basis of the prospect theory value function, this paper develops two approaches to reducing disutility by directing the decision maker's attention to either (actual) past or (expected) future losses that result in shifted reference points. After providing a graphical description of the approaches and a mathematical proof of the direction of their effect on judgment, we briefly illustrate the potential value of these approaches with examples from qualitative research on prostate cancer treatment decisions.

Original languageEnglish (US)
Pages (from-to)174-180
Number of pages7
JournalJudgment and Decision Making
Volume3
Issue number2
StatePublished - Feb 2008

Keywords

  • Medical decision making
  • Prospect theory
  • Reference points

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Applied Psychology
  • Economics and Econometrics

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