DIPOLE OF PAIN AND PLEASURE AND USE OF MENTAL ACCOUNTING TO REACH HEDONIC EQUILIBRIUM

Shirish Panchal and Avdhesh S. Jha

No 2014-09-11, Working papers from Voice of Research

Abstract: The current paper hypothesizes that humans try to reduce not only the pain but also pleasure (psychological, not physical) resulting due to economic losses, thereby trying to maintain a hedonic equilibrium. The researchers use an analogy of dipole in physics to express the hypothesis. While mitigation of pain is understood, reduction of pleasure is interesting to understand. Neurobiology may present its answer to this. Pain and pleasure when experienced are likely to cause hyper activity in neural networks. This consumes more energy, which may not be sustainable by the brain. Hence people may try to reach equilibrium to conserve the limited energy of the brain. The research discusses unique ability of mind to strategize through thoughts for reaching this hedonic equilibrium. Mental accounting is discussed as a device of human psyche used to achieve hedonic equilibrium. The work also tries to explain the importance of loss aversion and segregation of losses. Key words: Mental Accounting, Hedonic Equilibrium, Dipole, Pain, Pleasure, Gains, Losses, Pseudo-rationality, Prospect Theory, Need to survive, Loss Aversion, Segregation of gains and losses, Hedonic efficiency

Date: 2014-09
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