Document Type
Discussion Paper
Publication Date
10-1-2008
CFDP Number
1678
CFDP Revision Date
2010-02-01
CFDP Pages
29
Abstract
Psychologists report that people make choices on the basis of “decision utilities” that routinely overestimate the “experienced utility” consequences of these choices. This paper argues that this dichotomy between decision and experienced utilities may be the solution to an evolutionary design problem. We examine a setting in which evolution designs agents with utility functions that must mediate intertemporal choices, and in which there is an incentive to condition current utilities on the agent’s previous experience. Anticipating future utility adjustments can distort intertemporal incentives, a conflict that is attenuated by separating decision and experienced utilities.
Recommended Citation
Robson, Arthur and Samuelson, Larry, "The Evolution of Decision and Experienced Utilities" (2008). Cowles Foundation Discussion Papers. 1992.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1992