Risk aversion and the value of diagnostic tests (Q2202225)

This paper studies the relation between the expected value of diagnostic information and patient's risk aversion. Assuming perfect tests, it is demonstrated that the ex ante value of diagnostic information increases with risk aversion for diseases with low prevalence, but decreases with risk aversion for diseases with high prevalence. On the other hand, the ex post value of diagnostic information is shown to always increase with the patient's degree of risk aversion.