To maximize happiness, one could either improve desired external outcomes (e.g., wealth) or optimize the relationship between desired external outcome and happiness without improving the outcome per se. Economics focuses on the first method. The present chapter advocates a science about the...

Standard economic analysis assumes that people make choices that maximize their utility. Yet both popular discourse and other fields assume that people sometimes fail to make optimal choices and thus adversely affect their own happiness. Most social sciences thus frequently describe some...

Suppose an individual loses an irreplaceable object and someone else is at fault. How much should he be compensated? Normatively, compensation should equal the value (utility) to the victim. Our experiments demonstrate that compensation decisions often ignore value and are instead based on cost...

In this research, it is proposed that, when making a choice between consumption goods, people do not just think about which option will deliver the highest consumption utility but also think about which choice is most consistent with rationales-beliefs about how they should make decisions. The...