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Prospect theory, reference points, and health decisions

In preventative health decisions, such as the decision to undergo an invasive screening test or treatment, people may be deterred from selecting the test because its perceived disutility relative to not testing is greater than the utility associated with prevention of possible disease. The prospect theory editing operation, by which a decision maker's reference point is determined, can have important effects on the disutility of the test. On the basis of the prospect theory value function, this paper develops two approaches to reducing disutility by directing the decision maker's attention to either (actual) past or (expected) future losses that result in shifted reference points. After providing a graphical description of the approaches and a mathematical proof of the direction of their effect on judgment, we briefly illustrate the potential value of these approaches with examples from qualitative research on prostate cancer treatment decisions.