The Value of Medical Diagnosis: Why People Reject Medical Information

48 Pages Posted: 20 Sep 2011 Last revised: 1 Nov 2012

Markus Fels

Karlsruhe Institute of Technology

Date Written: November 01, 2012


This paper uses a model of reference-dependent preferences proposed by Koszegi and Rabin (2009) to derive the value of medical information when a decision-maker is loss averse over changes in beliefs. This allows to model the anticipation of potential disappointment upon receiving bad news about one's health status. The information's value in terms of improved subsequent decision-making with regard to a treatment decision is then amended by the anticipated emotional impact of information. It is shown that this emotional impact changes when information is instrumental, i.e. is affecting the decision about a subsequent action. The questions whether information is desirable from a decision-making or from an emotional point of view can thus not be separated. The model is applied to a patient's choice problem to undergo medical screening. The availability of effective cure and the timing of testing are predicted to be significant determinants of test uptake. This is in line with empirical research concerning patients' motives to decline testing.

Keywords: Information Acquisition, Reference Dependence, Disappointment Aversion, Medical Diagnosis

JEL Classification: D81, D83, I18

Suggested Citation

Fels, Markus, The Value of Medical Diagnosis: Why People Reject Medical Information (November 01, 2012). Available at SSRN: or

Markus Fels (Contact Author)

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131

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