Choosing from multiple alternatives in cost-effectiveness analysis with fuzzy willingness-to-pay/accept and uncertainty
MetadataShow full item record
Cost-effectiveness analysis of medical technologies requires valuing health, an uneasy task, as confirmed by variability of published estimates. Treating the willingness-to-pay/accept (WTP/WTA) as fuzzy seems an intuitive solution. Based on this premise, I construct a framework allowing to compare multiple health technologies using choice functions. The final choice must be crisp, so I discuss various defuzzification methods and show that using indecisiveness point (IP) for WTP/WTA (the value the decision maker equally approves/disapproves) has desirable properties: satisfying the independence of irrelevant alternatives and not treating the Likert scale as interval. I suggest three approaches to infer about IP with Likert-based surveys in random samples (hypothesis testing, Bayesian or frequentist estimation). No difference between IPs for WTP/WTA is found, and an explanation of the WTP-WTA disparity is provided. Estimating IP results in stochastic uncertainty, and I show how to conduct sensitivity analysis in the framework and what new insight is gained.
- KAE Working Papers 
Using this material is possible in accordance with the relevant provisions of fair use or other exceptions provided by law. Other use requires the consent of the holder.