Risk and uncertainty in health investment

Takao Asano, Akihisa Shibata

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

Extending the Grossman (J Polit Econ 80:223-255, 1972) model of health capital into a stochastic one, we analyze how the presence of Knightian uncertainty about the efficacy of health care affects the optimal health investment behavior of individuals. Using Gilboa and Schmeidler's (J Math Econ 18:141-153, 1989) model of maxmin expected utility (MMEU) with multiple priors, we show that an agent retains the initial level of health capital if the price of health care lies within a certain range. We also show that the no-investment range expands as the degree of Knightian uncertainty rises.

Original languageEnglish
Pages (from-to)79-85
Number of pages7
JournalEuropean Journal of Health Economics
Volume12
Issue number1
DOIs
Publication statusPublished - Feb 2011
Externally publishedYes

Fingerprint

Uncertainty
Economics
Delivery of Health Care
Health
Health Status
Knightian uncertainty
Healthcare
Risk and uncertainty
Health investment
Health capital
Multiple priors
Efficacy
Investment behavior
Maxmin expected utility

Keywords

  • Health investment
  • Risk
  • Uncertainty

ASJC Scopus subject areas

  • Health Policy
  • Economics, Econometrics and Finance (miscellaneous)

Cite this

Risk and uncertainty in health investment. / Asano, Takao; Shibata, Akihisa.

In: European Journal of Health Economics, Vol. 12, No. 1, 02.2011, p. 79-85.

Research output: Contribution to journalArticle

Asano, Takao ; Shibata, Akihisa. / Risk and uncertainty in health investment. In: European Journal of Health Economics. 2011 ; Vol. 12, No. 1. pp. 79-85.
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