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Learn or react? An experimental study of preventive health decision making
Journal
Exp Econ
Volume
24
Number
1
Pages / Article-Number
206-237
Abstract
Despite public health efforts, uptake of preventive health technologies remains low in many settings. In this paper, we develop a formal model of prevention and test it through a laboratory experiment. In the model, rational agents decide whether to take up health technologies that reduce, but do not eliminate the risk of adverse health events. As long as agents are sufficiently risk averse and priors are diffuse, we show that initial uptake of effective technologies will be limited. Over time, the model predicts that take-up will decline as users with negative experiences revise their effectiveness priors towards zero. In our laboratory experiments, we find initial uptake rates between 65 and 80% for effective technologies with substantial declines over time, consistent with the model's predictions. We also find evidence of decision-making not consistent with our model: subjects respond most strongly to the most recent health outcomes, and react to negative health outcomes by increasing their willingness to invest in prevention, even when health risks without prevention are known by all subjects. Our findings sug-gest that high uptake of preventive technologies should only be expected if the risk of adverse health outcomes without prevention is high, or if preventive technologies are so effective that the risk of adverse outcomes is negligible with prevention.
