Quadratic State-Dependent Utility Model for Decision-Making under Cognitive and Affective Constraints

Quadratic State-Dependent Utility Model for Decision-Making under Cognitive and Affective Constraints | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Quadratic State-Dependent Utility Model for Decision-Making under Cognitive and Affective Constraints Mohamad TAGHLOBI This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8428328/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper proposes a formally tractable extension of the standard utility framework in which preferences depend on endogenous decision-relevant states. We introduce a five-dimensional state vector incorporating material consumption \(\:\left(C\right)\) alongside bounded rationality \(\:\left(R\right)\), affective state \(\:\left(E\right)\), contextual valuation \(\:\left(A\right)\), and idiosyncratic preference components \(\:\left(F\right)\). Preferences are represented by a quadratic utility function with interpretable interaction effects, preserving scalar maximisation and standard concavity conditions while allowing for amplification, attenuation, and substitution mechanisms across cognitive and affective dimensions. The model provides a unified decision-theoretic representation of how internal states modulate marginal evaluation and choice without violating global concavity. We derive conditions under which affective states interact with rational deliberation in a stable manner, and we show how interactions among \(\:(R,E,A,F)\) generate state-dependent valuation patterns consistent with framing and context effects. A numerical illustration and a simulation of the \(\:R\)–\(\:E\) interaction space highlight the analytical flexibility of the framework. The proposed representation is intended as a general tool for decision theory, offering a basis for comparative statics, experimental design, and future empirical implementation of state-dependent preferences under cognitive and affective constraints. JEL classification: D01, D87, D91, C02. Microeconomics Behavioral Economics utility behavioural economics bounded rationality emotion aesthetics quadratic utility Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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