Phobic disorder, psychotherapy, and risk-taking: an economic perspective

Phobic disorders are receiving much attention in psychiatric practice today. Agoraphobia, the most common of the phobic disorders, involves the risk of experiencing a panic attack in public places, thus discouraging the worker from fully participating in the labor market. This paper applies the economic tools of rational choice under uncertainty to the analysis of agoraphobia, with the purpose of gaining more insight as regards the extent of deviation from normal work behavior (which presumably responds to incentives) and the effectiveness of psychotherapy in treating work-avoidance, challenging the popular claim that the cost of psychotherapy helps ensure its success.