Disutility

Expected Utility Theory

The utility of a health state is a cardinal measure of the strength of an individual's preference for particular outcomes when faced with uncertainty, on a scale from 0 to 1, where 0 generally reflects death and 1 reflects perfect health. A distinction is usually made in the decision-making literature between utilities, or strengths of preferences under uncertainty, and values, strengths of preferences under certainty. This concept of utilities dates back to 1944, when John von Neumann and Oskar [Page 413]Morgenstern developed a normative model for decision making under uncertainty—expected utility theory. This model calculates the utility that can be expected from each option in terms of the desirability of its outcomes and the probability with which they will occur. For most decisions in healthcare, outcomes may occur with a certain probability, and the decision problem is thus a problem of choice under uncertainty. Decision analysis is indeed firmly grounded in expected utility theory, and the most common use of utilities is in decision analyses. In decision analyses, the strategy of preference is calculated by combining the utilities of the outcomes with the probabilities that the outcomes will occur.