June 1, 1974
In a large class of decision problems under uncertainty, death, disability, and reductions in wealth enter the analysis as crucial arguments in the utility function. Much of the literature in public health and safety programs, insurance programs, and clinical decision-making concerns itself with optimal behavior in the presence of risk in these variables. This paper sets out, primarily, to describe the assumptions which typically underlie these analyses and demonstrate why they may be too restrictive for models which deal with death, disability, and disbursement variables. An alternative scheme is proposed.
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