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Self-delusion in the pursuit of happiness

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Abstract

The paper explores how repeated revisions of consumption plans increase long-run utility. If agents value present anticipations of future consumption, some revisions may be viewed as a benign form of self-delusion. We consider a minimal generalization of the Samuelson discounted utility model to allow for utility linked to next period consumption. Agents are assumed to vary with respect to their sophistication. Different environments likely to facilitate repeated revisions are also considered.

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  • Dag Einar Sommervoll, 2010. "Self-delusion in the pursuit of happiness," Discussion Papers 604, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:604
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp604.pdf
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    Keywords

    Intertemporalchoice; selfdelusion; timeinconsistency; naivete; self-con trol; discountedutilityfunctions; anticipation; memory;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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