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Title: Risk and Uncertainty in Health Investment
Authors: Asano, Takao
Shibata, Akihisa
Keywords: Health Investment
Risk
Uncertainty
Issue Date: Mar-2010
Publisher: Institute of Economic Research, Kyoto University
Journal title: KIER Discussion Paper
Volume: 696
Abstract: Extending the Grossman [12] 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 [11] 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.
URI: http://hdl.handle.net/2433/129604
Related Link: http://ideas.repec.org/p/kyo/wpaper/696.html
Appears in Collections:KIER Discussion Paper (English)

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