This project focuses on the healthcare decisions that surrogate decision-makers make for their loved ones who are nearing the end of life. It begins by extending Vonn-Neumann and Morgenstern’s expected utility model of decision-making under risk to include insights from behavioral economics. It also adjusts expected utility theory, a theory used to predict financial risk taking, to more accurately reflect the considerations of those choosing between treatments in the end-of-life healthcare space. Upon review of behavioral economic and social phycological literature, my project suggests that family caregivers may request a larger than optimal level of invasive, life-sustaining care for their loved one when forced to make a decision in a stress- induced “hot state.” It also suggests that requiring patients to complete an advance directive (while they are in a “cold state”) may lead to more rational, less risky decision making. This has some very important public finance implications, since invasive care can be extremely costly and almost all end-of-life procedures are publicly funded through Medicare. To test my hypothesis, I compare the healthcare decisions of those under stress with those who were not in a self- designed experiment. Additionally, I test the effect of an advance directive’s presence on a surrogate decision-maker’s risk preference. Analysis of the data suggests that acute stress increases the risk preference of family caregivers while the presence of an advance directive decreases risk preference, but both treatments only have an effect when decision-makers are choosing between hospice care and a surgery with a high probability of success. Further research is necessary to determine how to nudge family caregivers away from selecting low probability, “miracle” procedures at the end-of-life.


Mellizo, Philip




Behavioral Economics | Health Economics


Health, Medicare, behavioral economics, behavior, risk, stress, decision making

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



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