Misperception Drag

 

Let A = {a, b}, a and b being two states of nature.

 

The utility one could potentially derive from a is denoted as u(A=a), and that from b u(A=b).

 

While A might be revealed to be equal to either a or b, u(A=a) and u(A=b) could not be known until certain conditions are met.

 

When A is unknown, exp[u(A=a)] > exp[u(A=b)], where exp stands for "expected value or expectation of".

 

When A is revealed and, thus, known, four possible cases arise

 

1) When exp (A) = b, yet A = a,

   exp[u(A)] = exp[u(A=a)]',  and exp[u(A=b)]<exp[u(A=a)]'<exp[u(A=a)]

 

2) When exp (A) = b, and A = b

   exp[u(A)] = exp[u(A=b)]' = exp[u(A=b)]

 

3) When exp (A) = a, and A = a,

   exp[u(A)] = exp[u(A=a)]'' = exp[u(A=a)]

 

4) When exp (A) = a, yet A = b,

   exp[u(A)] = exp[u(A=b)]''< exp[u(A=b)] 

 

The results from 1) and 4) shows that even if an object per se remains unchanged, the revealation of its true nature (or what is perceived to be the true nature) combined with the subject's initial misperception, would cause the subjective expection of the utility of the object to decline.

 

(Guys reading psychology, need your help here)