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Prospect theory/mean-variance skewness model

presented by: Dr. Alexander Wilke M.Sc., ANIMUS Center for Cognitive Neuroscience, Neuroeconomics and Neuro-Public Health

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First publication date: 21.09.2022

Citation: Wilke, A.: “Prospect theory / mean-variance skew model”, in “Monitor Healthcare Research” (05/22), pp. 44-45. http://doi.org/10.24945/MVF.05.22.1866-0533.2442

Plain Text

We make around 35,000 decisions every day that determine our behavior. Many of these decisions, as well as parts of the decision-making process, occur unconsciously in the brain. The prospect theory1 (see definition 1) and the mean-variance skewness theory2 (see definition 2) describe the processes of benefit-oriented decisions in the brain, specifically when making decisions under uncertainty and/or with risks. But which of these models correlates best with reality? For neuroeconomics it now means finding out which models are actually mapped and processed in the brain.

>> It can be stated that in both models shown above, the decision-making mechanisms in the brain, especially in phase 1 (see Fig. 1), correlate with findings from neurobiological imaging studies. Especially with the mean-variance skewness model, we find the mechanisms of the 2nd phase (see Fig. 1) better confirmed by imaging methods. From a neuroeconomic perspective, both theories reflect the reality of decision-making very well, but need to be verified more deeply, taking other variables into account. <<

 

 

To which questions/problems can these theories be applied?
Health care policy measures often rely on the active participation of those involved. The theories can be applied to questions/problems in which active, neuroscience-adjusted decision-making strategies and/or participation strategies of the actors are essential for the successful and long-term implementation of measures and/or projects.

Which (known) errors are avoided by applying these theories?
These include, for example: B. avoiding barriers to acceptance and decision-making; the prevention of heuristic-driven decisions and/or the lack of utility argumentation.

Dr. Alexander Wilke M.Sc.m ANIMUS Center for Cognitive Neuroscience, Neuroeconomics and Neuro-Public Health

“The findings of the prospect theory and the mean-variance skewness theory show us how and in which areas our brain processes decisions with uncertainties and risks and brings about a final decision. Particularly in projects that fundamentally require active participation or even behavior modification on the part of doctors, payers and/or patients, we can now develop neuroscientific measures that may demonstrate acceptance, value and benefits in such a way that those involved Actors are optimally supported in their decision-making. This means that, for example, in the areas of compliance, adherence, prevention, disease management programs or cross-sector care, health care economics and health care policy measures can be implemented more successfully in the long term. An exciting new area of scientific application arises from bringing together the areas of health/utility economics and neuroeconomics.”

 

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