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On the genesis of Hedonic Adaptation

  • Perez Truglia, Ricardo Nicolas
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    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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    File URL: https://mpra.ub.uni-muenchen.de/19929/1/MPRA_paper_19929.pdf
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    File URL: https://mpra.ub.uni-muenchen.de/23080/1/MPRA_paper_23080.pdf
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    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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    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. Clark, Andrew E. & Diener, Ed & Georgellis, Yannis & Lucas, Richard E., 2006. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," IZA Discussion Papers 2526, Institute for the Study of Labor (IZA).
    3. Rafael Di Tella & John Haisken-De New & Robert Macculloch, 2010. "Happiness Adaptation to Income and to Status in an Individual Panel," Post-Print hal-00911821, HAL.
    4. 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).
    5. Arthur J. Robson, 2002. "Evolution and Human Nature," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 89-106, Spring.
    6. 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.
    7. 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.
    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. Trenton G. Smith & Attila Tasnádi, 2005. "A Theory of Natural Addiction," Microeconomics 0503006, EconWPA.
    11. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    12. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, vol. 72(1), pages 93-118, 01.
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