Evolutionary efficiency and mean reversion in happiness

Abstract

We model happiness as an innate incentive mechanism molded by natural selection. The metaphorical objective is to motivate the individual to- wards seeking goals that favor genetic replication. The end result of this evolu- tionary process is a mean-reverting happiness function that is based on a context- dependent reference point. This reference point will incorporate all information that is valuable in terms of assessing the individual’s performance, which in turn leads to a process of habit formation and peer comparisons. Based on principles of optimal incentives and statistical inference, the model delivers a unified account of several stylized facts surrounding the hedonic experience.