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Updated: Jun 25, 2026

Measuring the Subjective Value of Risky and Ambiguous Options using Experimental Economics and Functional MRI Methods
Published on: September 19, 2012
The impact of real options on willingness to pay for mortality risk reductions
Niclas A Krüger1, Mikael Svensson
1Department of Economics, Swedish Business School, Orebro University, Orebro, Sweden. niclas.kruger@kau.se
Abstract:
Public investments are dynamic in nature, and decision making must account for the uncertainty, irreversibility and potential for future learning. In this paper we adapt the theory for investment under uncertainty for a public referendum setting and perform the first empirical test to show that estimates of the value of a statistical life (VSL) from stated preference surveys are highly dependent on the inclusion of the option value. Our results indicate an option value of a major economic magnitude. This implies that previously reported VSL estimates, used in societal benefit-cost analysis of health investments, are exaggerated.
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