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A Cognitive Model of Individual Well-Being

  • David Schmeidler

    ()

  • Itzhak Gilboa

This paper offers a model of individual well-being that takes into account cognitive factors. It postulates that individuals compare payoffs to aspiration levels. The latter are determined by past experiences (adaptation), by other people's performance (interpersonal comparison), as well as by reasoning (justifications and excuses). We axiomatize a measure of well-being defined on real-valued vectors of various lengths. It is a linear combination of differences between payoffs and aspiration levels, where the aspiration level at each instance is a linear function of past payoffs.

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File URL: http://ecolan.sbs.ohio-state.edu/pdf/schmeidler/well-be.pdf
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Paper provided by Ohio State University, Department of Economics in its series Working Papers with number 029.

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Date of creation: Jul 1996
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Handle: RePEc:osu:osuewp:029
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  1. Layard, Richard, 1980. "Human Satisfactions and Public Policy," Economic Journal, Royal Economic Society, vol. 90(363), pages 737-50, December.
  2. Kapteyn, Arie & Wansbeek, Tom & Buyze, Jeannine, 1978. "The dynamics of preference formation," Economics Letters, Elsevier, vol. 1(1), pages 93-98.
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  4. Frank, Robert H, 1989. "Frames of Reference and the Quality of Life," American Economic Review, American Economic Association, vol. 79(2), pages 80-85, May.
  5. Schmeidler, David & Vind, Karl, 1972. "Fair Net Trades," Econometrica, Econometric Society, vol. 40(4), pages 637-42, July.
  6. Varian, Hal R., 1974. "Equity, envy, and efficiency," Journal of Economic Theory, Elsevier, vol. 9(1), pages 63-91, September.
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  9. Thurow, Lester C, 1971. "The Income Distribution as a Pure Public Good," The Quarterly Journal of Economics, MIT Press, vol. 85(2), pages 327-36, May.
  10. Loewenstein, George & Adler, Daniel, 1995. "A Bias in the Prediction of Tastes," Economic Journal, Royal Economic Society, vol. 105(431), pages 929-37, July.
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  12. repec:ner:tilbur:urn:nbn:nl:ui:12-364307 is not listed on IDEAS
  13. Tomes, Nigel, 1986. "Income distribution, happiness and satisfaction: A direct test of the interdependent preferences model," Journal of Economic Psychology, Elsevier, vol. 7(4), pages 425-446, December.
  14. Panzer, Elisha A & Schmeidler, David, 1974. "A Difficulty in the Concept of Fairness," Review of Economic Studies, Wiley Blackwell, vol. 41(3), pages 441-43, July.
  15. Harsanyi, John C., 1992. "Game and decision theoretic models in ethics," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 19, pages 669-707 Elsevier.
  16. Ng, Yew-Kwang & Wang, Jianguo, 1993. "Relative income, aspiration, environmental quality, individual and political myopia : Why may the rat-race for material growth be welfare-reducing?," Mathematical Social Sciences, Elsevier, vol. 26(1), pages 3-23, July.
  17. Mezias, Stephen J., 1988. "Aspiration level effects: An empirical investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 10(4), pages 389-400, December.
  18. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-63, June.
  19. Itzhak Gilboa, 1991. "Rationality and Ascriptive Science," Discussion Papers 943, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  20. Congleton, Roger D., 1989. "Efficient status seeking: Externalities, and the evolution of status games," Journal of Economic Behavior & Organization, Elsevier, vol. 11(2), pages 175-190, March.
  21. March, James G., 1988. "Variable risk preferences and adaptive aspirations," Journal of Economic Behavior & Organization, Elsevier, vol. 9(1), pages 5-24, January.
  22. Kapteyn, Arie & Wansbeek, Tom, 1985. "The individual welfare function : A review," Journal of Economic Psychology, Elsevier, vol. 6(4), pages 333-363, December.
  23. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
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