Seminario 26/01 – Francisco Alcalá (IVIE y CEPR) – Remembered happiness, lingering utility, and the Epicurean homo oeconomicus
Abstract: Consumption experiences generate enduring satisfaction (or dissatisfaction) that persists beyond the moment of consumption. This paper analyzes the rational behavior of individuals who anticipate this lasting impact and the cognitive limitations that shape memories–i.e, the peak-end rule, as documented by Daniel Kahneman and coauthors. The peak rule gives rise to non-smooth consumption trajectories characterized…
