Structure of decision tree

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Averaging out and folding back
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Time Trade-offWhat would you choose?

• moderate pain in hip/knee
• moderate stiffness in hip/knee moderate
  difficulty with work
• moderate difficulty with self-care
• severe restrictions on leisure
• severe emotional distress

Perfect health
or
40, 35, 30 .....years
40 years or

• Say, indifference point is 30 years. Value for
  Current State relative to Perfect Health 30/40
  .75 or 75

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Standard Gamble

• What would you choose?
• Sure thing Gamble

Lifetime in State Y1
Lifetime in perfect healh (U 1.00)
or
p .75
p .25
Immediate death (U 1.00)
At this point, the lotterys expected utility is
(.75)(1.00) (.25)(0.00) .75
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LINEAR ANALOGUE(Yields values) Worst / Best
Arthritic Health anchors

• moderate pain in hip/knee
• moderate stiffness in hip/knee
• moderate difficulty with work
• moderate difficulty with self-care
• severe restrictions on leisure
• severe emotional distress
• Rest of your natural life? Eg. 40 yrs.?
• ______________________________________
• Lowest (0)
  Highest (100)

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STANDARD GAMBLE Worst / Best Arthritis gamble
outcomes

• CERTAINTY
• 40 yrs. Current
• Arthritic State vs.

• LOTTERY
• p (eg. .80) chance of 40 yrs. no pain, stiffness
  ...
• (U 100)
• 1 - p (eg. .20) chance of worst pain, stiffness
  ... (U 0)

or