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Jan 16, 2013: Prof. Manel Baucells

We propose a comprehensive utility model of Anticipation and Recall (AR Model). The AR model predicts the felicity, or instant-utility, experienced before, during, and after a given event. We show that the felicity function is U-shaped during anticipation. Shortening anticipation makes a positive event more surprising and leads to an increase in utility from recall. We examine the optimal level of anticipation and of created expectations. The model contains prescriptions on how individuals may better cope with negative events. We provide empirical evidence in favor of the main implications of the model.