Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249588 
Year of Publication: 
2015
Citation: 
[Editor:] de León, Manuel [Editor:] Feng, Wei [Editor:] Feng, Zhaosheng [Editor:] Lopez Gomez, Julian [Editor:] Lu, Xin [Editor:] Martell, J.M. [Editor:] Parcet, Javier [Editor:] Peralta-Salas, Daniel [Editor:] Ruan, Weihua [Title:] Dynamical Systems and Differential Equations, AIMS Proceedings 2015, 10th AIMS International Conference (Madrid, Spain) [Publisher:] American Institute of Mathematical Sciences [Place:] Springfield, MO [Year:] 2015 [Pages:] 159-168
Publisher: 
American Institute of Mathematical Sciences, Springfield, MO
Abstract: 
Grossman's health investment model has been one of the most important developments in health economics. However, the model's derived demand function for medical care predicts the demand for medical care to increase if the individual's health status increases. Yet, empirical studies indicate the opposite relationship. Therefore, this study improves the informative value of the health investment model by introducing a reworked Grossman model, which assumes a more realistic Cobb-Douglas health investment function with decreasing returns to scale. Because we introduced uncertainty surrounding individual's health status the resulting dynamic utility maximization problem is tackled by optimal stochastic control theory.
Subjects: 
stochastic control
Bismut's approach
decreasing returns to scale
health investment model
demand for medical care
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Conference Paper
Document Version: 
Published Version

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