Wednesday, April 8, 2009

Choosing What Makes Us Happy (1): Impact Bias

To choose the optimal option to maximize happiness we need to

1. Predict accurately which option amongst the available choices will generate the best experience AND
2. Base the choice on the prediction.

Researchers have shown that people do not either predict or choose what maximizes their happiness, or even both.

Inability to predict the accurately how we may feel about a future event, may be due to various biases.

Impact Bias

Research has shown the people are unable to predict both (i) the intensity of an emotional event and (ii) as to how long it will last.

For example, cricket fans are generally not as happy as they expect themselves to be when their team wins.

In one study, voters in a gubernatorial election predicted that they would be significantly happier a month after the election if their candidate won than if their candidate lost. However, the supporters of the winning and losing candidates were just as happy a month after the election as they were before the election.

Thus if consumers become aware that buying a particular brand is not going to make them happy, their buying choices may change and they may choose to spend their money on something else.

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