**Chapter 3 Exercises**

**Heart transplant cost-effectiveness**

1. In Example 3.5.1 (heart transplants), extend the model to estimate the cost-effectiveness of transplantation, as in Example 2.6.1.

2. Suppose the policy-maker is willing to pay q = £25,000 for each year of life gained. What is the posterior probability that transplantation is cost-effective according to this policy? [Hint: calculate this by summarising the “incremental net benefit” of transplantation, defined as q*Is – Ic, where Is is the incremental survival and Ic is the incremental cost]

3. Compute the posterior probability that the incremental cost divided by the incremental survival is less than the willingness-to-pay amount of £25,000. Compare this with the answer to part 2, and explain any difference. Why is the method in part 2 a more appropriate way to calculate the probability of cost-effectiveness?