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Perception, utility, and evolution

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  • José F. Tudón M.

    (ITAM)

Abstract

This paper presents a model of the evolution of the hedonic utility function in which perception is imperfect. Netzer (Am Econ Rev 99(3):937–955, 2009) considers a model with perfect perception and finds that the optimal utility function allocates marginal utility where decisions are made frequently. This paper shows that it is also beneficial to allocate marginal utility away from more perceptible events. The introduction of perceptual errors can lead to qualitatively different utility functions, such as discontinuous functions with flat regions rather than continuous and strictly increasing functions.

Suggested Citation

  • José F. Tudón M., 2019. "Perception, utility, and evolution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 191-208, December.
    • Handle: RePEc:spr:etbull:v:7:y:2019:i:2:d:10.1007_s40505-018-0153-8
    DOI: 10.1007/s40505-018-0153-8
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    References listed on IDEAS

    as
    1. Nick Netzer, 2009. "Evolution of Time Preferences and Attitudes toward Risk," American Economic Review, American Economic Association, vol. 99(3), pages 937-955, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Evolution; Hedonic utility; Perception;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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