Thinking about values in prospect and retrospect: Maximizing experienced utility

Decision-makers often do not or cannot predict at the time of choice how their tastes may change by the time the outcomes are experienced. This paper explores the implications of making decisions by maximizing experienced utility ex post rather than ex ante. Focusing on being satisfied with choice in retrospect results in quite different kinds of problems than a prospective orientation that projects one's current preferences into the future. We examine a number of ways that people can easily mistake their reactions to outcomes in the future, and propose a series of hypotheses related to how people will be dissatisfied with their choices. Finally, we relate these barriers to good decisions to prescriptive processes that assist people in making decisions with which they will be happy in the future.

Duke Scholars

Author Joel C. Huber Fuqua School of Business