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Why known unknowns may be better than knowns, and how that matters for the evolution of perception and happiness

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University of Gothenburg

Abstract

As humans have a limited range of feelings and limited perception, we can’t rank all possible actions in order of preference. However, we can use this inability to rank some actions, to infer rankings of other actions. Surprisingly, having less precise sensory information improves our ability to draw such inferences. Therefore, if nature selected a “Reasoning Man” with perfect inferential abilities, this person would have muted feelings and blurred perception. Behavior would nevertheless maximize happiness and evolutionary fitness, and not be merely satisficing. These results might help explain why the human sensory system has its well-documented limitations.

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JEL: B52; D91; I31

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Indirect evolutionary approach, utility function

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Working Papers in Economics
829

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