The term ‘utility’ can be interpreted in terms of the hedonic experience of an outcome (experienced utility) or in terms of the preference or desire for that outcome (decision utility). It is this second interpretation that lies at the heart of the methods that economists have developed to value non‐market goods, such as health. In …
Tag Archives: Utility
Knutson, B., &Peterson, R. (2005). Neurally reconstructing expected utility. Games and Economic Behavior, 52(2), 305-315.
While the concept of “expected utility” informs many theories of decision making, little is known about whether and how the human brain might compute this quantity. This article reviews a series of functional magnetic resonance imaging (FMRI) experiments designed to localize brain regions that respond in anticipation of increasing amounts of monetary incentives. These studies …
Amir, O., Ariely, D., &Carmon, Z. (2008). The dissociation between monetary assessment and predicted utility. Marketing Science, 27(6), 1055-1064.
We study the dissociation between two common measures of value—monetary assessment of purchase options versus the predicted utility associated with owning or consuming those options, a disparity that is reflected in well-known judgment anomalies and that is important for interpreting market research data. We propose that a significant cause of this dissociation is the difference …
Helliwell, J. F., &Huang, H. (2008). How& #39;s your government? International evidence linking good government and well-being.British Journal of Political Science, 38(4), 595-619.
This article employs World Values Survey measures of life satisfaction as though they were direct measures of utility, and uses them to evaluate alternative features and forms of government in large international samples. Life satisfaction is found to be more closely linked to several World Bank measures of the quality of government than to real …
Frey, B. S., &Stutzer, A. (2005). Beyond outcomes: measuring procedural utility. Oxford Economic Papers, 57(1), 90-111.
Abstract People not only obtain utility from actual outcomes but also from the conditions which lead to these outcomes. The paper proposes an economic concept of this notion of procedural utility. Preferences beyond outcome can be manifold. We distinguish procedural utility people get from institutions as such, i.e., from how allocative and redistributive decisions are …
Kahneman, D., &Thaler, R. H. (2006). Anomalies: Utility maximization and experienced utility. Journal of Economic Perspectives, 20(1), 221-234.
In this column, we discuss a version of the utility maximization hypothesis that can be tested—and we find that it is false. We review empirical challenges to utility maximization, which return to the old question of whether preferences optimize the experience of outcomes. Much of this work has focused on a necessary condition for …