Perceived Utility: An Experimental Study in Behavioral Economics

Abstract

In the 18th century, when rationality was accepted and the belief that people are selfish due to their natural nature, the first effort of economics, which aimed at human as a social science, was to provide the individual with a universal structure based on the basic assumptions of “rationality and selfishness”. The goal of this individual was also defined as “maximizing utility”. Ultimately, “Homo-economicus”, that is, “Rational Economic Individual”, took place. In this study, the phenomenon of utility maximization, which the science of economics is based on when defining the individual, has been analyzed with an experimental study from the perspective of behavioral economics. The research demonstrates its importance by aiming to show the impact of perceptions on utility that are ignored by mainstream economics (Neoclassical economics). The research includes soldiers in a military unit in Yalova/TURKEY. In the study, analysis was carried out by tasting the same product with different price tags to two different groups of subjects. It was concluded from the experiment that 60.7% of the subjects moved away from the rationality assumption by getting the perception of “price and surprise”. In this context, this study is an original study by revealing the "perceived benefit" phenomenon.