Health Economics Quiz: Preventative Measures
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Questions and Answers

What is the primary factor that influences consumer response to a financial gamble in prospect theory?

  • The probability of success
  • The frame of reference and the weights assigned to outcomes (correct)
  • The expected value of the gamble
  • The level of risk involved

According to prospect theory, what is the primary consideration for consumers when evaluating a financial gamble?

  • The expected utility of the gamble
  • The framing effect of the gamble (correct)
  • The level of risk aversion
  • The probabilistic nature of the gamble

What is the primary difference between prospect theory and expected utility theory?

  • The consideration of framing effects in decision-making (correct)
  • The emphasis on expected value in decision-making
  • The consideration of loss aversion in decision-making
  • The role of risk aversion in decision-making

How do consumers seeking to maximize expected utility respond to random losses in the expected utility model?

<p>They select a policy with full coverage and no coinsurance (A)</p> Signup and view all the answers

What is the relationship between the size of the deductible and the loading fee in the expected utility model?

<p>The larger the deductible, the higher the loading fee (D)</p> Signup and view all the answers

How do the weights assigned to outcomes influence consumer response to financial gambles in prospect theory?

<p>They increase the attractiveness of high-probability outcomes (D)</p> Signup and view all the answers

What is a potential argument against insuring predictable, low-cost preventative measures?

<p>They may reduce the demand for other medical treatments (B)</p> Signup and view all the answers

Which model challenges the traditional expected utility maximization model by incorporating psychological and emotional factors?

<p>The prospect theory model (A)</p> Signup and view all the answers

According to prospect theory, how do people respond to gains in their well-being?

<p>They are risk averse (A)</p> Signup and view all the answers

What is a key factor that influences consumer response to a financial gamble, according to prospect theory?

<p>The framing of the gamble (C)</p> Signup and view all the answers

What is a characteristic of people's attitudes towards losses, according to prospect theory?

<p>They are risk seeking (D)</p> Signup and view all the answers

How does the prospect theory model deviate from the traditional expected utility maximization model?

<p>It incorporates psychological and emotional factors (A)</p> Signup and view all the answers

What is the private benefit of vaccination for Person i in the described scenario?

<p>Cπi (B)</p> Signup and view all the answers

What is the condition for the social benefit of vaccination to exceed the private benefit?

<p>CΣj≠i πij &gt; Cπi (A)</p> Signup and view all the answers

What is the implication of the externality benefit on the social willingness to pay for vaccination?

<p>It increases the social willingness to pay (A)</p> Signup and view all the answers

What happens to the private willingness to pay for vaccination if the number of vaccinated individuals exceeds N2?

<p>It decreases (A)</p> Signup and view all the answers

What is the relationship between the number of vaccinated individuals (N1) and the threshold (N2) for private decisions to lead to vaccination?

<p>N1 &lt; N2 (B)</p> Signup and view all the answers

What is the consequence of ignoring the externality benefit in the described scenario?

<p>Under-vaccination (C)</p> Signup and view all the answers

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