Managerial Decision Making

 

Case Study 11: “Medical Tests” on page 558.

One of the principles that arises from a decision-analysis approach to valuing informationis that information is worthless if no possible informational outcome will change the decision.For example, suppose that you are considering whether to make a particular investment. You are tempted to hire a consultant recommended by your Uncle Jake (who just went bankrupt last year) to help you analyze the decision. If, however, you think carefully about the things that the consultant might say and conclude that you would (or wouldnot) make the investment regardless of the consultant’s recommendation, then you should nothire the consultant. This principle makes Perfectly good sense in the light of our approach; do not pay for information that cannot possibly changeyour mind. In medicine, however, it is standard practice for physicians to order extensive batteries of testsfor patients. Although different kinds of patients may be subjected to different overall sets of tests,it is nevertheless the case that many of these tests provide information that is worthless in a decision-analysis sense; the doctor’s prescription would be the same regardless of the outcome of a particular test.
Questions
1. As a patient, would you be willing to pay for such tests? Why or why not?
2. What incentives do you think the doctor might have for ordering such tests, assuming he realizes that his prescription would not change.
3. How do his incentives compare to yours?

 

Sample Solution

Decision analysis is a method for making the best decisions in the face of uncertainty. It allows the user to input costs, probabilities, and health-related quality of life values, as well as other relevant inputs, and then derives probabilistically weighted means of these outcome metrics. Costs and QALYs are commonly used as outcome measures in public health. Decision analysis is typically at the center of cost-effectiveness assessments in public health and medicine (Gold et al., 1998). However, almost any outcome metric, such as vaccine-preventable illnesses avoided, deaths avoided, and so on, can be modeled. As a result, decision analysis can be used for internal decision-making processes by municipal health authorities, pharmaceutical corporations, and other entities.

part in the modern world. It could be said that gene editing, and more specifically, designer babies, would encourage social standards regarding beauty to continue and get worse. Women are under more pressure to look a certain way to fit in and conform to the body standard at the time (Mazur, 2010). One year, blue eyes may be the standard, then it may change to brown in a few years. This is a similar case with body shape. According to an investigation conducted in 2007, 90% of all woman aged 15-64 around the world would like to change at least one aspect of their physical appearance (Calogero, Boroughs and Thompson, 2007).This shows that technology that allows you to change your child’s appearance will potentially be used by parents, based on these social standards. As will be demonstrated in this essay, there are also consequences of using this technology that impact the child on which they are being used on. Robert Sparrow of Monash University argues in his 2018 paper on gene editing (Sparrow, 2019) of the obsolescence of ‘designer babies’. He contends that when a child is given enhancements at birth, they will “rapidly go out of date” and “Sooner or later, every modified child will find him or her- self to be ‘yesterday’s child”. With this, he is making the point that, just as fashion becomes obsolete as the years go by, genetic traits that are considered ‘attractive’ will soon lose their flair. When this does happen, the child will feel inadequate and will no longer have what society considers the ‘best trait’. Furthermore, different qualities may be considered more attractive in the modern world, so gene editing would further homogenise and universalise our understanding of beauty, attractiveness and what is considered ‘good’. One thing that makes the human race so interesting is the diversity of people. This homogenisation of the idea of beauty will eliminate this diversity.

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