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Economic consequences of mispredicting utility

Frey, Bruno S. and Stutzer, Alois. (2008) Economic consequences of mispredicting utility. WWZ Discussion Papers, 2008 (01). Basel.

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Official URL: http://edoc.unibas.ch/dok/A4448847

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Abstract

A framework is proposed for organizing phenomena related to the (mis)prediction of utility, in particular neglecting adaptation. A categorization is introduced that accounts for
asymmetries in misprediction. In decision-making, goods and activities satisfying extrinsic desires are more salient than those serving intrinsic needs. Accordingly, there is an overconsumption of the former compared to the latter. The theoretical analysis is consistent with econometric evidence on commuting choice using data on subjective well-being. People show substantial adaptation to a higher labor income but not to commuting. This may account for the finding that people are not compensated for the burden of commuting.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Politische ├ľkonomie (Stutzer)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Stutzer, Alois
Item Type:Working Paper
Bibsysno:Link to catalogue
Publisher:WWZ
Note: -- Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Related URLs:
Identification Number:
  • handle: RePEc:bsl:wpaper:2008/01
Last Modified:13 Mar 2018 14:35
Deposited On:08 Jun 2012 06:45

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