Choices for Individual Patients vs. Groups

Publisher Website
Google Scholar
Abstract
Redelmeier and Tversky (April 19 issue)* present results of several elegant experiments that highlight the observed discrepancy between aggregate and individual perspectives in medical decision making, but they suggest that this discrepancy is "difficult to explain on normative grounds." I think the discrepancy can be at least partly explained by considering a simple game of chance. Suppose you are invited to play a game in which a fair coin is tossed: if it lands heads up, you receive $100, but if it lands tails up, you must pay $50. How much would you be willing to pay to play such a game once? The expected value of this game is $25 (0.5 × $100 − 0.5 × $50 = $25). Because many dislike the chance of losing $50, however, they might pay something less than $25 — perhaps $10 — for the opportunity to play this game once. They pay a price lower than the expected value to compensate them for the risk of coming out losers.

This publication has 5 references indexed in Scilit: