This is a diagrammatic way of comparing technologies. A four-quadrant diagram of cost difference plotted against effect difference yields: quadrant I, where the intervention is more effective and more costly than the comparator ; quadrant II, where the intervention is more effective and less costly than the comparator; quadrant III, where the intervention is less effective and less costly than the comparator; and quadrant IV, where the intervention is less effective and more costly than the comparator.
In quadrant II, the intervention dominates the comparator and in quadrant IV, the comparator dominates the intervention. Quadrants I and III are the more interesting cases. Here, the cost-effectiveness of the alternatives depends upon the size of the incremental cost-effectiveness ratio (ICER or ΔC/ΔE) and on whether the E is positive or negative. Let there be a maximum amount a decision-maker will pay for an increment of outcome (ΔE) indicated by the dashed line l. Any point to the left of l indicates that comparator treatment is more cost-effective, while points to the right of l indicate that intervention is more cost-effective. All points below l are in the ' region of acceptability ' (note that ΔC/ΔE is lower - actually negative - than l in quadrant IV, but that this quadrant cannot be in the region of acceptability since ΔE is actually negative here).