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Back to Bentham? Explorations of Experienced Utility

Daniel Kahneman, Peter P. Wakker and Rakesh Sarin
The Quarterly Journal of Economics
Vol. 112, No. 2, In Memory of Amos Tversky (1937-1996) (May, 1997), pp. 375-405
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/2951240
Page Count: 31
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Back to Bentham? Explorations of Experienced Utility
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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 lines of empirical research.

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