Here are some of those terms:
- expected utility, experienced utility, remembered utility - basically utility is defined as what you get out of a certain experience and expected is past, experienced is present, and remembered is future. For us to know what we want, all three types of utility must align.
- availability heuristic - people assume that the more available some piece of information is to memory, the more frequently we must have encountered it in the past.
- anchoring - tendency to heavily rely , or "anchor," on one piece of information when making decisions, for example seeing $3,000 TVs for sale at Walmart will make people think that paying $1,000 for a smaller TV is reasonable when if that $3,000 TV had not been there they would have only been willing to spend $500.
- framing - how we feel about a decision or an event depends highly on how we "frame" it (whether we think we are getting a discount or paying a fee/surcharge).
- endowment effect - once you own something (it becomes part of your endowment), you value it more and giving it up becomes more of a loss.
- chooser versus picker - a chooser actively thinks about and reflects on possibilities before making a decision whereas a picker simply makes decisions without thinking and hopes for the best.
- maximizer versus satisficer - a maximizer wants to know that every decision made was the best that could be made whereas a satisficer settles for good enough (rather than perfect) without worrying about the possibility that there might be something better. Minimizers also tend to ruminate, savor positive events less, do not cope as well with negative events, and take longer to recover their sense of well-being after something bad happens to them. People tend to be "domain specific" in their tendencies to be maximizers or satisficers.
- second-order decisions - methods to reduce the burden of decisions (adopting rules or presumptions; creating standards; delegating authority to others; taking small steps; picking rather than choose).
- postdecision regret versus anticipated regret - the first can be thought of as "buyer's remorse" (which makes decisions harder to enjoy) while the second is thinking about the regret one could feel (which makes decisions tougher to make).
- counterfactual thinking - the ability to imagine a world that is different than our actual world. Upward counterfactual thinking (imagining a better result) may lead to envy and resentment but can also inspire and motivate change. Downward counterfactual thinking (imagining a worse result) can lead to pleasure or guilt in your current situation.
- sunk costs - costs that have already been incurred that cannot be recovered to any significant degree.
- positional goods - products and services whose value is mostly, if not exclusively, a function of their desirability in comparison to other options, for example a Rolex watch as compared to a generic brand from Walmart.
To read my other posts about The Paradox of Choice, click here; to read my other entries about positive psychology, click here.
And with that, I conclude my informal study of positive psychology and the science and economics of happiness. (I still plan to read Happiness: Lessons from a New Science by Richard Layard and The Joy of Living: Unlocking the Secret and Science of Happiness by Yongey Rinpoche Mingyur, but not until the summer or fall.)
