The Economics of Meaning

One of the ways in which behavioral economics – the application of insights from psychology to economics – has extended the scope of economic analysis has been by expanding the range of human motives taken into account to explain economic behavior. Neoclassical economic theory rests on an updated notion of the utility concept first proposed by Bentham, but only recently have economists begun to explore the full range of determinants of utility that Bentham enumerated over 200 years ago. For example, Loomes and Sugden (1982, 1987; Loomes, 1988) have explored the economic conse-quences of avoidance of regret and disappointment, both of which Bentham included in his short list of pains. Caplin and Leahy (1997) discuss implications that follow from the idea that people derive utility not only from immediate experiences, but also from anticipation – what Bentham called ”pleasures and pains of expectation and imagination ” (see, also, Loewenstein, 1987; Brunnermeier and Parker, 2002). And game theory has been similarly enriched by th