Economics Research Seminar Series: Lionel Page

Research topic: “If you can, you must.” Information, utility, and loss aversion

Lionel Page, University of Queensland

Topic

“If you can, you must.” Information, utility, and loss aversion

abstract

We consider utility as a reward system shaped by evolution to motivate us to make the best decisions possible. An optimal system consists of a reference-dependent utility function that adapts to expectations. We show that anticipatory utility and loss aversion emerge as features of this optimal system that encourage the agent to set the reference point to the level of his expectations.

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