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On the genesis of Hedonic Adaptation

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  • Perez Truglia, Ricardo Nicolas
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    Abstract

    Some sensations, in addition to guide behavior, serve an extra and even more important role: as warning or defense mechanisms (e.g. pain, fever). Additionally, intense sensations are costly from a fitness point of view. With only these two biological facts we show that Nature must design utility functions with regulation mechanisms such as hedonic adaptation or expectation-based preferences. Even though they are rarely incorporated into economic models, such mechanisms are widely recognized and documented in many fields such as neuroscience and psychology. Using such utility functions economists will not only provide more accurate welfare predictions, but we will also increase the number of behavioral phenomena that we are able to explain. Finally, we provide as an application a model of the psychological defenses.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19929.

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    Date of creation: 29 Jul 2009
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    Handle: RePEc:pra:mprapa:19929

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    Keywords: hedonic adaptation; evolution; expectations; decision utility; experienced utility;

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    1. Smith, Trenton G. & Tasnadi, Attila, 2005. "A Theory of Natural Addiction," 2005 Annual meeting, July 24-27, Providence, RI, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 19195, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    10. Oswald, Andrew J. & Powdthavee, Nattavudh, 2006. "Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges," IZA Discussion Papers 2208, Institute for the Study of Labor (IZA).
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