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Title:Suboptimal choices and the need for experienced individual well-being in economic analysis PDF Logo
Authors:Hsee, Christopher K.
Rottenstreich, Yuval
Stutzer, Alois
Issue Date:2012
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6346
Abstract:Standard economic analysis assumes that people make choices that maximize their utility. Yet both popular discourse and other fields assume that people sometimes fail to make optimal choices and thus adversely affect their own happiness. Most social sciences thus frequently describe some patterns of decision as suboptimal. We review evidence of suboptimal choices that arise for two reasons. First, people err in predicting the utility they may accrue from available choice options due to the evaluation mode. Second, people choose on the basis of salient rules that are unlikely to maximize utility. Our review is meant to highlight the possibility of a research program that combines economic analysis with measures of experienced individual well-being to improve people's happiness.
Subjects:suboptimal choice
individual well-being
experienced utility
evaluation mode
salient rule
utility misprediction
JEL:D01
D11
D60
D91
Persistent Identifier of the first edition:urn:nbn:de:101:1-201205026126
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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