Back to Bentham? Explorations of Experienced Utility

Daniel Kahneman, Peter Wakker and Rakesh Sarin

The Quarterly Journal of Economics, 1997, vol. 112, issue 2, 375-406

Abstract: Two core meanings of "utility" are distinguished. "Decision utility" is the weight of an outcome in a decision. "Experienced utility" is hedonic quality, as in Bentham's usage. Experienced utility can be reported in real time (instant utility), or in retrospective evaluations of past episodes (remembered utility). Psychological research has documented systematic errors in retrospective evaluations, which can induce a preference for dominated options. We propose a formal normative theory of the total experienced utility of temporally extended outcomes. Measuring the experienced utility of outcomes permits tests of utility maximization and opens other Unes of empirical research.

Date: 1997
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