Health Economics Quiz: Preventative Measures

Play an AI-generated podcast conversation about this lesson

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?

They select a policy with full coverage and no coinsurance 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?

The larger the deductible, the higher the loading fee Signup and view all the answers

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

They increase the attractiveness of high-probability outcomes Signup and view all the answers

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

They may reduce the demand for other medical treatments Signup and view all the answers

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

The prospect theory model Signup and view all the answers

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

They are risk averse Signup and view all the answers

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

The framing of the gamble Signup and view all the answers

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

They are risk seeking Signup and view all the answers

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

It incorporates psychological and emotional factors Signup and view all the answers

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

Cπi Signup and view all the answers

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

CΣj≠i πij > Cπi Signup and view all the answers

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

It increases the social willingness to pay Signup and view all the answers

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

It decreases 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?

N1 < N2 Signup and view all the answers

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

Under-vaccination Signup and view all the answers