How you look at life is predicated by how you set expectations. If a product/service/person/situation exceeds expectations it will be deemed good. If it doesn’t meet expectations it’s a disappointment. It makes us say/feel: ‘I am happy with XYZ’ or ‘I am disappointed by XYZ’. Happy.
At its core, expectation setting is communication. When you communicate well, the expectations are set more accurately and have a bigger chance of being satisfied (it also allows you to exceed expectations). When you communicate poorly, the expectations will be off and it will be hard to deliver on them.
This is also true of expectation setting on a personal level. If you don’t effectively communicate with yourself (i.e. think) about how you realistically expect things to play out, you will find it harder to match your expectations you subconciously set. The key to be happy about them is to set them just high enough it gets you excited, but low enough so they can be exceeded.
Expectation setting is your measuring device you use to measure where something sits in its ability to make you happy, so better make it a good one! (and calibrate often)