A Sensitivity Analysis for the Derived Micromort Value of Life and Death Decisions Using Two Methods for Constructing Utility Functions

Abstract

This paper provides various sensitivity analyses for the effects of the elicitation parameters of two methods for the utility function assessments needed to deal with risky decisions involving health state and consumption. The two methods include: a) Using a utility function over a deterministic value function, and b) Using a utility copula function over utility functions for each attribute. The two methods are explored and compared in terms of the derived Micromort value (a way to value a risky decision deal in dollars) and how it is sensitive to each parameter needed for the assessments of each method. The results show that the Micromort value increases with the consumption level and decreases with age. As the decision-maker increases the tradeoff between health and wealth, the Micromort value tends to increase. In addition, becoming highly risk averse over value, the decision-maker also has a higher Micromort value.