Priority Setting in Health Care with Disease and Treatment Risks

This paper deals with the issue of priority setting in health care under uncertainties about the severity of the illness and the effectiveness of medical treatment. We examine the effect of a disease uncertainty(a treatment uncertainty) on the allocation of health care resources in the presence of a treatment risk(a disease risk) and identify preference conditions under which the social planner allocates more resources to higher risk population. We allow for the simultaneous presence of two risks and investigate the joint effect of two-source uncertainties on health care allocation when the two risks are either small or positively quadrant dependent. The effect of inequality aversion on health care allocation is also analyzed by introducing an equity weighting function. Our work extends the previous model of health care priority to two-risk framework and provides new insights into the problem of health care decision making under uncertainty.

Optimal risk allocation in alliance infrastructure projects: A social preference perspective

The mechanism of risk allocation is designed to protect all stakeholders,and it is vital to project success.Qualitative and quantitative ways of optimizing risk allocation have been well documented in extant literature(e.g.,allocation principles,models,and solutions),and the foci of existing research are usually the maximization of rational utility.Few research has focused on partners’social preferences affecting the output of risk allocation.This study presents a quantitative approach based on modeling alliance member(AM)’s inequity aversion(IA)to analyze risk-sharing arrangements in an alliance project.Fehr and Schmidfs inequity-aversion model is integrated into modeling partner’s utility.This paper derives results for an alliance leader(AL)’s optimal risk-sharing ratio and AM's optimal risk-management effort simultaneously.The derivation is based on solving a restrained optimization problem using the conception and methods from Stackel-berg game theory.Results show that an AM’s IA significantly affects risk allocation between AL and AM.Specifically,envious preference is positively related to AL5s optimal risk-sharing ratio,whereas guilty preference negatively affects AL5s optimal risk-sharing ratio.These findings will be of interest to academics and practitioners involved in designing alliance negotiations.