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Standard decision theory assumes that when choosing between options that have the same costs, decision makers evaluate which option will deliver the highest expected outcome utility and choose that option. This is known as a consequentialist utility analysis method. In reality, people rarely base their decisions strictly on this approach. In recent years, behavioral decision theorists have proposed that choices are often driven by decision makers' affect, or predicted experience, toward the choice options, and that such affect-driven decisions often lead to choices different from those that the standard utility analysis would prescribe. For example, before making a decision, they tend to think about the emotions that the outcomes of their choices are likely to trigger (i.e., decision makers predict their hedonic experiences). Evidence from behavioral decision research suggests that the emotions people expect to experience in the future are important determinants of their behavior. As a result of this development, decision theorists now make a distinction among three types of utilities—decision utility (as revealed by one's choice), experienced utility (feelings with the chosen option), and predicted utility (prediction of experienced utility). The last few decades have witnessed a large amount of research on the inconsistency between predicted and actual experience.

Hedonic Prediction

Hedonic prediction is a term denoting people's current judgments about what their emotions (e.g., happiness, distress, pain, fear) or preferences (e.g., for different health states or treatments) will be in the future. A substantial body of empirical research from a range of medical and nonmedical domains demonstrates that people typically exaggerate their emotional reactions (positive or negative) to future events. The emotions that have been investigated include pain, fear, and subjective well-being (happiness). For example, people tend to overpredict different types of acute pain (e.g., menstruation pain, headache, postoperative pain, dental pain) and chronic pain (e.g., arthritis pain and low back pain). Overprediction has also been observed when people forecast emotions such as fear and anxiety. For example, people overpredict their fear of dental treatments, confined spaces, snakes, and spiders.

Researchers have also investigated people's forecasts of the impact of specific positive and negative events that affect their well-being (such as significant life events, medical results, and treatments). In general, people overpredict the hedonic impact of negative events. For example, patients about to undergo surgically necessary amputations delay or opt out of the operations because they anticipate that their lives will be ruined without a limb. Similarly, women were found to overpredict their distress after receiving positive test results for unwanted pregnancies. There is also evidence that dieters overpredict their distress after being unable to achieve their weight-loss targets. One study demonstrated that people also overpredict the level of distress experienced by other people, for example, after positive HIV test results. People also tend to overpredict the impact of positive events. Existing evidence suggests that patients who decide to undergo cosmetic surgery are not necessarily happier after it. People are also found to overpredict the relief in distress that people with negative results experienced. Other studies have shown that people exaggerate the positive effect of a lottery win on their life, the pleasure that they will derive from a future holiday trip, and the happiness that they will experience if their favorite sports team wins.

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