ECO331H1 Chapter Notes - Chapter Week 8: Duration Neglect, Daniel Kahneman, Affective Forecasting
Document Summary
Bentham(1789): utility is sovereign master that points out what we ought to do and determines what we shall do. Usually ignored in modern economics in favor of decision utility i. ii. Subjective hedonic experience cannot be observed or measured. Choices provide all necessary information about utility of outcomes. Current: utility of outcomes refers to weight in decisions. Focus more on intensity of pain/pleasure rather than duration. System that forms and stores evaluations of situations not designed to optimize experienced utility. What attributes of temporal profile of instant utility determine remembered utility of an episode. Peak-end evaluation: remembered utility of episode is predicted by averaging peak (most intense value) of instant utility/disutility and instant utility at end of experience. Duration of experience has little effect on remembered utility. Violations of temporal monotonicity: remembered disutility of aversive episode can be reduced by adding extra period of discomfort that reduces peak-end average.
