nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2006‒01‒29
three papers chosen by
Matthew Baker
US Naval Academy, USA
  1. What Happiness Research Can Tell Us About Self-Control Problems And Utility Misprediction By Alois Stutzer; Bruno S. Frey
  2. Global Risk, Investment and Emotions By Bosman, R.A.J; van Winden, Frans A.A.M.
  3. Menu-Dependent Self-Control By Jawwad Noor
  1. By: Alois Stutzer; Bruno S. Frey
    Abstract: Neoclassical economic theory rules out systematic errors in consumption choice. According to the basic view, individuals know what they choose. They are able to predict how much utility an activity or a good produces for them now and in the future and they can maximize their utility. This implies that behavior reveals consistent preferences. This approach makes it impossible to detect and understand sub-optimal consumption decisions, due to problems of self-control and the misprediction of utility. We propose the economics of happiness as a methodological approach to study these phenomena. Based on proxy measures for experienced utility, it is, in principle, possible to directly address whether some observed behavior is sub-optimal and is therefore reducing a person’s well-being. We discuss recent evidence on smoking and eating habits, TV viewing and commuting choice.
    Keywords: adaptation, individual decision-making, revealed preference, self-control, subjective well-being, utility misprediction
    JEL: D00 D11 D12 D84 D91 I12 I31
    Date: 2006–01
    URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:267&r=evo
  2. By: Bosman, R.A.J; van Winden, Frans A.A.M.
    Abstract: We investigate a novel dynamic choice problem in an experiment where emotions are measured through self-reports. The choice problem concerns the investment of an amount of money in a safe option and a risky option when there is a 'global risk' of losing all earnings, from both options, including any return from the risky option. Our key finding is that global risk can reduce the amount invested in the risky option. This result cannot be explained by classical Expected Utility or by its main contenders Rank-Dependent Utility and Cumulative Prospect Theory. An explanation is offered by taking account of emotions, using the emotion data from the experiment and recent psychological findings. We also find that people invest less if own earnings are at stake, compared to money obtained as an endowment.
    Keywords: dynamic choice; emotions; global risk; investment; real effort
    JEL: A12 C91 D80 G11
    Date: 2006–01
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:5451&r=evo
  3. By: Jawwad Noor
    Date: 2006–01–24
    URL: http://d.repec.org/n?u=RePEc:cla:levrem:122247000000001061&r=evo
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