So far we have not distinguished between the anticipated utility of an alternative (utility ex ante) and its utility as experienced after it has been selected (utility ex post). For example, after his tree house is completed, Crusoe may discover that it has unexpected leaks and is therefore less useful to a purpose (shelter) that he had originally envisioned. In general, individuals tend to learn from their mistakes, thus minimizing any discrepancies between these two kinds of utilities. The distinction between them therefore becomes analytically significant only when special factors, to be discussed later, prevent the individual from receiving feedback from his mistakes and correcting them. In our initial analyses, we treat utility ex ante and utility ex post as equivalent. Later subsections will explore uncertainty, risk, and the production and flow of information at length.      Next page
Previous pagePrevious Open Review window