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Centre for Policy on Ageing | |
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Incorporating option values into the economic evaluation of health care technologies | Author(s) | Stephen Palmer, Peter Smith |
Corporate Author | Centre for Health Economics, University of York |
Publisher | University of York, York, 1999 |
Pages | 24 pp (Centre for Health Economics discussion paper 166) |
Source | Publications Centre, Centre for Health Economics, University of York YO1 5DD. |
Keywords | Health services ; Costs [care] ; Econometrics. |
Annotation | Despite uncertainty being intrinsic to economic evaluation of health care, existing techniques for handling uncertainty remain underdeveloped compared to formal techniques commonly applied in the business sector. This paper develops an alternative approach to handling uncertainty in economic evaluation, based on quantifying uncertainty using "option pricing" techniques. The central feature of option pricing is that investments are rarely "now or never" propositions. The presence of uncertainty and the degree of irreversibility of a decision makes it clear that some flexibility in the timing of a decision is often a desirable characteristic with an economic value. The paper identifies the key determinants of the "option value" and its implications for health technology assessment, namely the presence and type of uncertainty; the ability to defer a decision; and the irreversibility of the decision. (RH). |
Accession Number | CPA-990420213 B |
Classmark | L: QDC: WE |
Data © Centre for Policy on Ageing |
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...from the Ageinfo database published by Centre for Policy on Ageing. |
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