Utility

Abstract

Modern conceptions of utility are rooted in the system that Jeremy Bentham proposed to determine which actions and laws most benefit the most people. Bentham believed that the value of every action could be quantified in terms of its utility -the intensity of pleasure or pain that it caused, as well as the duration of its influence, its uncertainty, and its propinquity or remoteness. The value of every action was thus a function of the total pleasure and pain it elicited, weighted by its duration, certainty, and when it would happen (Bentham, 1789). This system, which fell out of favor among economists of the twentieth century, serves as the basis of much of the research examining the pleasure and pain derived from experiences and normative decision making today (Bruni & Sugden, 2007;Read, 2007). In this chapter, I review the history of the concept from Bentham to the present (Historical Background), distinctions between different kinds of utility and judgments (Components and Judgments of Experienced Utility), how utility is measured (Measuring Instant and Total Utility), contextual factors that influence the utility associated with experiences (Context Dependence), how experienced utility is evaluated prospectively and retrospectively (Predicted and Remembered Utility), and why people make decisions that do not maximize utility (Maximization Failures). Historical BackgroundBentham recognized that the cardinal utility of a given action -the precise amount of pleasure or pain it would evoke -was not necessarily known before it was performed. Still, cardinal utility could serve as a normative and prescriptive standard by which to judge individual actions, decisions, and societies: If act X provides more pleasure and less pain than act Y, act X is better and should be chosen. If the citizens of society X experience more pleasure than the citizens of society Y, then society X is the better society. His conception of utility included more than sensory stimuli and 10 0002503639.indd 295 7/31/2015 4:44:44 PM

Positive interventions: An emotion regulation perspective.

“…This before−during−after distinction aligns well with behavioral economics, decision-making, and consumer behavior literatures, where researchers have identified three distinct sources of pleasure: the preexperience utility from anticipation, the utility from the experience itself, and the postexperience utility from reminiscence (Elster & Loewenstein, 1992; Kahneman, 1994; Loewenstein, 1987; see also Morewedge, in press, for a recent review on anticipated, experienced, and remembered utility). This distinction is particularly useful for understanding the dynamics of regulating positive emotions in everyday life (e.g., people may play the lottery just because buying a ticket allows them to dream about what they would do; people may buy souvenir pictures to help them remember how fun a roller-coaster ride was).…”

Impact bias or underestimation? Outcome specifications predict the direction of affective forecasting errors.

“…One factor hindering such absolute predictions is that the perceptions of values of outcome specifications are relatively imprecise and malleable (e.g., Buechel & Morewedge, 2014; Morewedge, 2015; Stevens, 1975; Volkman, 1951). The perceived value of most specific outcome specifications is relative, being influenced by the comparison standards salient at the time of judgment (e.g., Helson, 1948; Kahneman & Miller, 1986).…”

“…Deciding in the present and planning for the future requires people to not only accurately predict which experiences will make them feel better and worse, but also to assess how good and how bad those experiences will make them feel (e.g., Charpentier, De Neve, Li, Roiser, & Sharot, 2016; Mellers & McGraw, 2001; Morewedge, 2015; Morewedge & Hershfield, 2015). Our theory and findings reconcile the seemingly incongruous cases of impact bias in affective forecasting and cases in which its opposite has been demonstrated.…”

“…A surgical procedure, for instance, may have a small or large impact on one’s health, be short or long, have a small or large likelihood of success, and may loom in the near or distant future. These outcome specification values can influence the hedonic impact of events (Mellers, 2000; Mellers, Schwartz, Ho, & Ritov, 1997; Morewedge, 2015). They are sometimes positively correlated with the hedonic impact of an event; presumably, winning more money is better than winning less money, and having a longer commute is usually worse than having a shorter commute (Mellers et al, 1997; Morewedge, Kassam, Hsee, & Caruso, 2009).…”

How (and When) the Presence of Food Decreases Enjoyment of Customer Experiences

“…Whether at a buffet, concert, sporting event, or work, consumers frequently purchase food to eat later. Anticipating future consumption, also known as “savoring,” has positive consequences for the ultimate consumption of that particular experience (Loewenstein 1987; Loewenstein and Prelec 1993; Morewedge 2015). Nowlis, Mandel, and McCabe (2004) introduce the presence (vs. absence) of food to manipulate the vividness of an upcoming food consumption experience.…”