PSYCHOLOGICAL EXPECTED UTILITY THEORY AND ANTICIPATORY FEELINGS * A

We extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution of uncertainty. We show how these anticipatory feelings may result in time inconsistency. We provide an example from portfolio theory to illustrate the potential impact of anticipation on asset prices.

[1]  Simon Grant,et al.  Intrinsic Preference for Information , 1998 .

[2]  S. Narod,et al.  What you don't know can hurt you: adverse psychologic effects in members of BRCA1-linked and BRCA2-linked families who decline genetic testing. , 1998, Journal of clinical oncology : official journal of the American Society of Clinical Oncology.

[3]  J. Fries.  Reducing the need and demand for medical services. , 1998, Psychosomatic medicine.

[4]  Matthew E. Kahn.  Diabetic Risk Taking: The Role of Information, Education and Medication , 1998 .

[5]  B. Bernheim,et al.  What Accounts for the Variation in Retirement Wealth Among U.S. Households? , 1997 .

[6]  N. Frijda,et al.  Experimental Social Fear: Immunological, Hormonal, and Autonomic Concomitants , 1996, Psychosomatic medicine.

[7]  Miles S. Kimball,et al.  Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Survey , 1995 .

[8]  Sean A. Spence,et al.  Descartes' Error: Emotion, Reason and the Human Brain , 1995 .

[9]  David W Harless,et al.  The predictive utility of generalized expected utility theories , 1994 .

[10]  P. Jacobsen,et al.  Anticipatory anxiety in women receiving chemotherapy for breast cancer. , 1993, Health psychology : official journal of the Division of Health Psychology, American Psychological Association.

[11]  Elisha Y. Babad,et al.  Wishful Thinking—Against All Odds , 1991 .

[12]  A. MacLeod,et al.  Worry is reasonable: the role of explanations in pessimism about future personal events. , 1991, Journal of abnormal psychology.

[13]  P. Weil.  Nonexpected Utility in Macroeconomics , 1990 .

[14]  Larry G. Epstein,et al.  Substitution, Risk Aversion, and the Temporal Behavior of Consumption and Asset Returns: A Theoretical Framework , 1989 .

[15]  Andrew Ortony,et al.  The Cognitive Structure of Emotions , 1988 .

[16]  G. Loewenstein.  Anticipation and the Valuation of Delayed Consumption , 1987 .

[17]  S. M. Miller,et al.  Monitoring and blunting: validation of a questionnaire to assess styles of information seeking under threat. , 1987, Journal of personality and social psychology.

[18]  Robert Sugden,et al.  Disappointment and Dynamic Consistency in Choice under Uncertainty , 1986 .

[19]  M. Andrykowski,et al.  Development of anticipatory nausea: a prospective analysis. , 1985, Journal of consulting and clinical psychology.

[20]  R. Pope.  Timing contradictions in von Neumann and Morgenstern's axioms and in savage's ‘sure-thing’ proof , 1985 .

[21]  C. Harris,et al.  Existence and Characterization of Perfect Equilibrium in Games of Perfect Information , 1985 .

[22]  David E. Bell,et al.  Disappointment in Decision Making Under Uncertainty , 1985, Oper. Res..

[23]  Suzanne M. Miller,et al.  Interacting effects of information and coping style in adapting to gynecologic stress: should the doctor tell all? , 1983, Journal of personality and social psychology.

[24]  Evan L. Porteus,et al.  Temporal Resolution of Uncertainty and Dynamic Choice Theory , 1978 .

[25]  L. E. Klusman.  Reducation of pain in childbirth by the alleviation of anxiety during pregnancy. , 1975, Journal of consulting and clinical psychology.

[26]  R. Elliott,et al.  Heart rate and skin conductance in anticipation of shocks with varying probability of occurrence. , 1974, Psychophysiology.

[27]  R. Lazarus,et al.  Anticipatory stress and coping reactions under various conditions of uncertainty. , 1972, Journal of personality and social psychology.

[28]  J. Averill,et al.  Vigilant and nonvigilant coping strategies and pscyhophysiological stress reactions during the anticipation of electric shock. , 1972, Journal of personality and social psychology.

[29]  R. Lazarus.  Psychological stress and the coping process , 1970 .

[30]  K. Hinderer,et al.  Foundations of Non-stationary Dynamic Programming with Discrete Time Parameter , 1970 .

[31]  L. W. Barnes,et al.  CHOICE OF DELAY OF INEVITABLE SHOCK. , 1964, Journal of abnormal psychology.

[32]  Howard Kunreuther,et al.  Decision making under ignorance: Arguing with yourself , 1995 .

[33]  A. Damasio.  Descartes’ Error. Emotion, Reason and the Human Brain. New York (Grosset/Putnam) 1994. , 1994 .

[34]  N. Frijda.  Moods, emotion episodes, and emotions. , 1993 .

[35]  A. Isen,et al.  Positive affect and decision making. , 1993 .

[36]  Jeff T. Larsen,et al.  The psychophysiology of emotion. , 1993 .

[37]  J. Holland,et al.  Psychological distress and surveillance behaviors of women with a family history of breast cancer. , 1992, Journal of the National Cancer Institute.

[38]  J. Elster,et al.  Utility from memory and anticipation. , 1992 .

[39]  C. Plott.  psychology and economics , 1990 .

[40]  M. Machina.  Dynamic Consistency and Non-expected Utility Models of Choice under Uncertainty , 1989 .

[41]  Charles D. Spielberger,et al.  Chapter 14 – CONCEPTUAL AND METHODOLOGICAL ISSUES IN ANXIETY RESEARCH , 1972 .

[42]  R. H. Strotz.  Myopia and Inconsistency in Dynamic Utility Maximization , 1955 .