Herrero, C., and A.M. Guerrero
Journal of Health Economics – 24 (2005) 33-54
Abstract: Under expected utility, the individual preferences over lotteries on health profiles can be represented either by a multiplicative utility function, when mutual utility independence is claimed, or, an additive one (known as QALY), when it is claimed additive independence. In this paper, we impose a weaker condition, i.e., utility independence with respect to the initial health states of an individual decision maker, initial independence, and we derive a semi-separable utility function. In addition, we assess its parameters by a Standard Gamble procedure. Our results could be useful in cost-utility analysis for carrying out health care program evaluations.