Determinants of Experienced Utility: Laws and Implications

Satisfaction in experiencing the future depends on decisions made today. We consider six well‐known psychological laws governing satisfaction. The laws capture habit formation and satiation. We show it is possible to formalize these laws by means of a utility model and to derive implications from the laws: wanting versus liking, crescendo, recharge periods, variety seeking, and craving. The discussion combines mathematical propositions, experimental findings in psychology, and time‐honored wisdom. We discuss how the sixth law–projection bias–may lead to incorrect predictions of experienced utility and suboptimal life‐balance choices.