PolySciFi Blog

One of the random conversations that Thason and I had yesterday revolved around was whether or not people were utility maximizers. As a little insight into how these conversations flow, the utility maximization was tangentially related to my little theory that industriallization leads to bad Catholics in response to a counterpoint from Thason, which was in response to my theory that after the death rate goes to zero the birth rate will also go to zero, which was in response to Thason's challenge of my theory that the world will become significantly less urbanized in the future which was all spawned by me seeing a DHL truck. We don't freebase. Really.¹

Back on topic, after being initially hard pressed to come up with an example to support my assertion, we eventually settled on the limited rationality that people have at their disposal when evaluating the expected utility. Frequently when expectations must be evaluated, people make decisions that if they thought a little deeper probably would not make. For instance, playing the lotto or the slots is an expected loser, yet people do it all the time. This of course ignores the "fun" of playing the lotto or slots that may offset the the expected monetary loss in terms of utility. However, this does not extend to everyone. For instance, my fiance recently expressed an interest in playing the lotto premised on the logic that "someone has to win." She is certainly not alone in this logic, but it ignores the the fact that while someone has to win, many many more have to lose. Gambling situations, as previously discussed where people attempt to divine a pattern to exploit also constitute a situation where people are unable to fully understand their utility and accordingly fail to maximize their utility.

So because of 1) An inability to calculate expected utilities and 2) an inability to accurately characterize their utility (in some cases these are the same) people are imperfect utility maximizers.

So with that dorky discussion in the back of my mind, last night Adult Swim showed the Family Guy episode where Peter (and the entire neighborhood) listen to a time-share spiel for the a chance to win a boat or take what's in the "mystery box."

On being offered a choice between a boat and a "mystery box," Peter chooses the mystery box after offering the following rationale:

"A boat's a boat. A mystery box could be anything. It could even be a boat! You know how much we wanted one of those. We'll take the box!"

Peter Griffin, paragon of faulty utility maximizers...

Footnotes
1. No Really.
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