Evolutionary Efficiency and Happiness
We model happiness as a measurement tool used to rank alternative actions. Evolution favors a happiness function that measures the individualâ€™s success in relative terms. The optimal function is based on a time-varying reference pointâ€”or performance benchmarkâ€”that is updated over time in a statistically optimal way in order to match the individualâ€™s potential. Habits and peer comparisons arise as special cases of such an updating process. This updating also results in a volatile level of happiness that continuously reverts to its long-term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness.
References listed on IDEAS
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- Ken Binmore, 1994. "Game Theory and the Social Contract, Volume 1: Playing Fair," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262023636.
- Clark, Andrew E & Oswald, Andrew J, 1993.
"Satisfaction and Comparison Income,"
Economics Discussion Papers
10018, University of Essex, Department of Economics.
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