Choosing Treatment Policies Under Ambiguity

Posted: 31 Aug 2011

See all articles by Charles F. Manski

Charles F. Manski

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 2011

Abstract

Economists studying choice with partial knowledge typically assume that the decision maker places a subjective distribution on unknown quantities and maximizes expected utility. Someone lacking a subjective distribution faces a problem of choice under ambiguity. This article reviews recent research on policy choice under ambiguity, when the task is to choose treatments for a population. Ambiguity arises when a planner has partial knowledge of treatment response and does not feel able to place a subjective distribution on the unknowns. I first discuss dominance and alternative criteria for choice among undominated policies. I then illustrate with the choice of a vaccination policy by a planner who has partial knowledge of the effect of vaccination on illness. I next study a class of problems in which a planner may want to cope with ambiguity by diversification, assigning observationally identical persons to different treatments. Lastly, I consider a setting in which a planner should not diversify treatment.

Suggested Citation

Manski, Charles F., Choosing Treatment Policies Under Ambiguity (September 2011). Annual Review of Economics, Vol. 3, pp. 25-49, 2011, Available at SSRN: https://ssrn.com/abstract=1920100 or http://dx.doi.org/10.1146/annurev-economics-061109-080359

Charles F. Manski (Contact Author)

Northwestern University - Department of Economics ( email )

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