Abstract

http://ssrn.com/abstract=981450
 
 

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Evolutionary Efficiency and Happiness


Luis Rayo


University of Chicago - Booth School of Business

Gary S. Becker


University of Chicago - Department of Economics; University of Chicago - Booth School of Business


Journal of Political Economy, Vol. 115, April 2007

Abstract:     
We model happiness as a measurement tool used to rank alternative actions. Evolution favors a happiness function that measures the individual's success in relative terms. The optimal function is based on a time-varying reference point - or performance benchmark - that is updated over time in a statistically optimal way in order to match the individual's potential. Habits and peer comparisons arise as special cases of such an updating process. This updating also results in a volatile level of happiness that continuously reverts to its long-term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness.

Accepted Paper Series


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Date posted: April 23, 2007  

Suggested Citation

Rayo, Luis and Becker, Gary S., Evolutionary Efficiency and Happiness. Journal of Political Economy, Vol. 115, April 2007. Available at SSRN: http://ssrn.com/abstract=981450

Contact Information

Luis Rayo (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Gary S. Becker
University of Chicago - Department of Economics ( email )
1126 East 59th Street
Chicago, IL 60637
United States
University of Chicago - Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
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