Decision Thresholds for Medical Tests Under Ambiguity Aversion

Abstract

We consider medical decision-making under diagnostic and therapeutic uncertainty and analyze how ambiguity aversion affects the decisions to test and treat, thereby contributing to the understanding of the observed heterogeneity of such decisions. We show that under diagnostic ambiguity (i.e., the probability of disease is ambiguous), prior testing becomes more attractive if the default option is no treatment and less so if the default option is treatment. Conversely, with therapeutic ambiguity (i.e., the probability of a successful treatment is ambiguous), ambiguity aversion reduces the tolerance toward treatment failure so that the test option is chosen at a lower probability of failure. We differentiate between conditional and unconditional ambiguity aversion and show that this differentiation has implications for the propensity to test. We conclude by discussing the normative scope of ambiguity aversion for the recommendations and decisions of regulatory bodies.

Value and demand for genetic information and ambiguity aversion revisited

“…With HPR ambiguity aversion, it is not possible to explicitly solve for the test and test‐treatment thresholds. Nevertheless, using concavity of υ , we can show that $${\mu }_{\mathrm{HPR}}^{t}\gt {\mu }_{\mathrm{EUT}}^{t}$$ and $${\mu }_{\mathrm{HPR}}^{t\mathrm{Rx}}\lt {\mu }_{\mathrm{EUT}}^{t\mathrm{Rx}}$$ (i.e., the demand for imperfect genetic testing decreases with the degree of HPR ambiguity aversion; Sevim & Felder, 2022). The following proposition compares the value of information in the case of HPR ambiguity aversion and EUT.…”

“…A genetic test might also be useful to infer the probability of a successful treatment. 15 Sevim and Felder (2022) studied the effect of ambiguity aversion in the therapeutic uncertainty model (Eeckhoudt, 2002) in which treatment increases the spread of health outcomes as it might fail. In this environment, the effects of KMM ambiguity aversion on the value of genetic information are expected to be opposite to the ones under diagnostic uncertainty.…”

“…Sevim and Felder (2022) showed that KMM ambiguity aversion increases the demand for the test at low μ (i.e., $${\mu }_{\mathrm{KMM}}^{t}\lt {\mu }_{\mathrm{EUT}}^{t}$$ for $$0\le \mu \lt {\mu }_{\mathrm{KMM}}^{\mathrm{Rx}}$$) and decreases demand at high μ (i.e., $${\mu }_{\mathrm{KMM}}^{t\mathrm{Rx}}\lt {\mu }_{\mathrm{EUT}}^{t\mathrm{Rx}}$$ for $${\mu }_{\mathrm{KMM}}^{\mathrm{Rx}}\le \mu \le 1)$$. The following proposition extends this result to the value of information.…”

“…Berger et al (2013) analyze the effect of KMM ambiguity aversion on the treatment threshold (Pauker & Kassirer, 1975) and show that for diagnostic uncertainty, it increases the propensity to treat. Adding the diagnostic test option, Sevim and Felder (2022) proved that KMM ambiguity aversion shifts both the test and the test‐treatment threshold in favor of treatment under diagnostic ambiguity. The present study differs by focusing on the value of genetic information and provides a comparison of the effect under different definitions of ambiguity depending on the source of uncertainty.…”