Anyone who has ever made an important decision knows that anticipated emotions play a role. There are effects of the feelings and moods we experience at the time of a choice and effects of anticipated feelings about future consequences of choice. We have developed a descriptive theory of the anticipated pleasure of outcomes called decision affect theory. The theory rests on the assumption that pleasure and pain are evaluated relative to the status quo and other salient reference points, such as counterfactual outcomes, personal goals, and social comparisons. All of these comparisons have asymmetric effects; the incremental displeasure of obtaining the worse of two outcomes is greater in magnitude than the incremental pleasure of getting the better of two outcomes. Finally, beliefs about the likelihood of outcomes moderate the effects of comparisons. Surprising outcomes lead to stronger emotional responses than expected outcomes.
In past research, we have applied our theory to risky choice. We assume that people anticipate the pleasure or displeasure of each outcome of an option (as predicted by decision affect theory), weight those feelings by the chances they will occur, and sum over outcomes. This process yields an average anticipated pleasure for an option. People then compare the average pleasure of all options and select the one that maximizes expected pleasure.
Our theory of choice is called subjective expected pleasure theory. This proposal builds on past work and has three primary goals. First, we will extend our theory to riskless choice and test it by conducting seven studies. Four of them examine endowment effects and the status quo bias. Three additional studies investigate other well-known phenomena in riskless choice, such as asymmetric dominance, preference reversals, and advantages vs. disadvantages. Our second goal is to examine the effects of moods on anticipated emotions, beliefs, and choice. Although we expect to find mood-congruent effects, it is quite possible that moods can have opposing effects on judgments and choice. Our third goal is to examine the accuracy of hedonic forecasts immediately after the decision has been resolved and some time later. Accuracy is essential for emotion-based choice; decisions based on faulty predictions will surely be sub-optimal. Research suggests that people focus on attributes that are salient at the moment, but not necessarily important later one. That is, they are insensitive to adaptation. We will explore affective forecasts in three real world studies and three laboratory studies. If deviations in forecasts occur, we will explore methods for improving accuracy.
