Risk perception, prevention and diagnostic tests.

The objective of this paper is to study the impact of risk perception and diagnostic information on medical prevention decisions. The intertemporal preferences of individuals are represented by a model of recursive rank dependent utility, which has the advantage of allowing risk perceptions to vary over time and with health status. The main results of the paper are the following. Concerning the impact of risk perception on prevention, two types of pessimists have to be distinguished: the moderate pessimists and the fatalists. Both types overestimate the probability of disease, but the fatalists underestimate the reduction of the disease probability by prevention. Risk perception modification after the occurrence of the disease influences prevention decisions. Indeed, we show that moderate pessimists often choose a high level of primary and tertiary prevention, but a moderate pessimist who becomes fatalist after the occurrence of the disease may choose a high level of primary prevention and a low level of tertiary prevention.