Nonexpected Utility Theories

Medical treatments offer health prospects. A health prospect represents a course of action with respect to one's health for which the outcome is generally uncertain. A surgery, initiation of a pharmaceutical treatment, and an exercise program are examples of [Page 817]health prospects. For simplicity of exposition, this entry considers only binary prospects, prospects involving two outcomes. Such binary prospects are all that is needed to measure health utility. Figure 1 shows a health prospect [.45: 24; 2] that offers different survival durations, 24 years and 2 years with associated probabilities .45 and .55 = −.45.

When utilities are known, it is a widely held view that expected utility is normative and is thus the appropriate approach for assigning value to a prospect such as that in ...