Do people choose what makes them happy and how do they decide at all? A theoretical inquiry

Niklas Scheuer ()
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Niklas Scheuer: Johannes Gutenberg University Mainz

No 2002, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

Abstract: We develop a theoretical model that jointly explains optimal choices and happiness. We work with constant elasticity of substitution functions for utility and happiness. Employing a choice framework, individuals are confronted with two options. When there exists a trade-off, we determine parametric conditions for which individual happiness and utility coincide as well as oppose each other. Comparing the empirical evidence of Benjamin et al. (2012), our model can explain three out of four possible happiness-utility combinations. Regarding how individuals actually decide, our findings suggest that this is partly random. This explanation accounts for the remaining 11.2 % of individuals.

Keywords: Consumer Economics; Theory; General Welfare; Well-Being; Micro-Based Behavioral Economics (search for similar items in EconPapers)
JEL-codes: D11 D91 I31 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2020-01-24
New Economics Papers: this item is included in nep-hap and nep-hpe
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