• Open Access

The evolution of decision and experienced utilities

Authors

  • Arthur Robson,

    1. Department of Economics, Simon Fraser University; robson@sfu.ca
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  • Larry Samuelson

    1. Department of Economics, Yale University; Larry.Samuelson@yale.edu
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    • We thank the Canada Research Chair Program, the Social Sciences and Humanities Research Council of Canada and the National Science Foundation (SES-0549946 and SES-0850263) for financial support. We appreciate useful discussions with Alex Kacelnik and Luis Rayo, and helpful feedback from seminar audiences, the editor, and two referees.


Abstract

Psychologists report that people make choices on the basis of “decision utilities” that routinely overestimate the “experienced utility” consequences of these choices. This paper argues that this dichotomy between decision and experienced utilities may be the solution to an evolutionary design problem. We examine a setting in which evolution designs agents with utility functions that must mediate intertemporal choices, and in which there is an incentive to condition current utilities on the agent's previous experience. Anticipating future utility adjustments can distort intertemporal incentives, a conflict that is attenuated by separating decision and experienced utilities.

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