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Pure altruism and misjudgement: A bad combination?
Nicolai Fink Simonsen1, Trine Kjær1, Dorte Gyrd-Hansen1
1DaCHE - Department of Public Health, University of Southern Denmark, J.B. Winsløws Vej 9B, 5000 Odense C, Denmark.
Journal of Health Economics
|November 18, 2021
Summary
Individuals act as pure altruists, valuing health risk reductions. However, misjudging others' benefits leads to biased public health valuations and non-optimal outcomes.
Area of Science:
- Health Economics
- Behavioral Economics
- Public Health
Background:
- Stated preference studies show varied valuations for health risk reductions between private and public perspectives.
- Limited research exists on individuals' ability to predict others' valuations of risk reduction.
Purpose of the Study:
- To determine if individuals exhibit pure altruistic preferences.
- To investigate if pure altruism leads to biased valuations of public risk reductions due to misjudging others' preferences.
Main Methods:
- A large-scale online incentivized experiment was conducted.
- The experiment utilized a public good game variant where individual endowments depended on choices.
- Valuations for health risk reductions were elicited.
Main Results:
- Individuals demonstrated pure altruistic behavior, attempting to account for others' insurance benefits.
- Participants inaccurately predicted the benefits others would receive from insurance.
- This misjudgment resulted in non-optimal outcomes and biased valuations for public risk reductions.
Conclusions:
- While individuals display pure altruism in valuing health risk reductions, they misjudge others' benefits.
- This cognitive bias leads to suboptimal resource allocation and inaccurate public health valuations.
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