Anticipation Utility

October 2, 2011

Holidays and vacations are wonderful. They give use a break from the stress and monotony of the workplace, a time to catch up with friends and family, and a chance to see new and exciting places. And part of the enjoyment of a holiday is looking forward to it. Knowing that you have something good coming up lets you enjoy that experience before you even have it, and can change your well-being long before you actual experience it. Let’s call this “anticipation utility”. It can apply to holidays, cigarette breaks, the weekend – anything you look forward to. The basic model is that you get pleasure (utility) from imagining an experience you will have in the future. In doing so, you get a positive experience “for free”. Anticipation utility must be small relative to actual utility, as it not possible to enjoy the daydream of something more than the thing itself, but it can still have some strong influences. Anticipation utility is curious because (these are all hypotheses, not facts):

  1. It is unexpected and not noticed much, except when you are in anticipatory mode. Excitement and pre-enjoyment of things don’t fit in any standard model of economic rationality, and therefore…
  2. We tend to not factor in anticipation utility when designing our consumption patterns. Most literature shows that people are too short-sighted, or have too high a discount rate on future experiences. We prefer smaller-sooner to larger-later. Anticipation utility says that you should usually plan for positive experiences in the future rather than have them now – that way you get both the experienced utility, and the anticipation utility. Why this is might have to do with…
  3. How anticipation utility works through time. I think we get higher and higher levels of anticipation utility the closer we get to an actual experience. This means that if we have the choice between having a chocolate in the near future, and having a chocolate in the far future, we want it now. In this respect, it is not easily discriminated from normal anticipation utility.
  4. It helps us do unpleasant things now, and for longer. The pleasure we get now from and experience we will have in the future can enable a much longer or tougher experiences now. Imagining that I get a beer at the end of a long run actually helps me run faster and longer.

The testable hypotheses are straightforward:

  • Give someone a boring and unpleasant task to do (say data entry).
  1. Normal Condition: Give them an unanticipated break and a chocolate after an hour of work.
  2. Anticipation Condition: Tell them they’ll get a break and a chocolate after an hour’s worth of work.
  • See who processes more data, who feels happier throughout the process, and who rates the job as better ex-post.

Assuming some set of positive results, the question is why anticipation utility is not more widely employed and used structurally both by ourselves and by society.