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On the genesis of Hedonic Adaptation

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  • Perez Truglia, Ricardo Nicolas

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.

Suggested Citation

  • Perez Truglia, Ricardo Nicolas, 2009. "On the genesis of Hedonic Adaptation," MPRA Paper 19929, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:19929
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    File URL: https://mpra.ub.uni-muenchen.de/23080/1/MPRA_paper_23080.pdf
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    References listed on IDEAS

    as
    1. George Loewenstein & Ted O'Donoghue & Matthew Rabin, 2003. "Projection Bias in Predicting Future Utility," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1209-1248.
    2. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
    3. Arthur J. Robson, 2002. "Evolution and Human Nature," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 89-106, Spring.
    4. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2008. "Lags And Leads in Life Satisfaction: a Test of the Baseline Hypothesis," Economic Journal, Royal Economic Society, vol. 118(529), pages 222-243, June.
    5. Oswald, Andrew J. & Powdthavee, Nattavudh, 2008. "Does happiness adapt? A longitudinal study of disability with implications for economists and judges," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1061-1077, June.
    6. Trenton G. Smith, 2004. "The McDonald’s Equilibrium. Advertising, empty calories, and the endogenous determination of dietary preferences," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 23(3), pages 383-413, December.
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    8. Arthur J. Robson, 2001. "The Biological Basis of Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 11-33, March.
    9. David Laibson, 2001. "A Cue-Theory of Consumption," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 81-119.
    10. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, vol. 72(1), pages 93-118, January.
    11. Arthur J. Robson, 2001. "Why Would Nature Give Individuals Utility Functions?," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 900-929, August.
    12. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
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    More about this item

    Keywords

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

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • I00 - Health, Education, and Welfare - - General - - - General

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