The Impact Of Emotions

Question 1

What are the types of emotions by Rick and Loewenstein?

Answer 1

-expected emotions:anticipated to occur as a result of an event. Experienced when the outcome of a decision is realised (not at the moment if choice) how u think ur gonna feel
-immediate emotions:experienced at the moment of choice/decision
Integral emotions:arise from thinking about the future consequences
Incidental emotions:arise from sources which are not related to the task at hand (e.g moods that affect the decision)

Only incidental emotions pose a problem because they get bolted into the decision

Question 2

What is an example of an expected emotion?

Answer 2

Regret:only works when comparing 2 outcomes

Question 3

What is an example of an immediate emotion?

Answer 3

Fear:no emotions mean more risk

Question 4

What is an example of an incidental emotion?

Answer 4

Moods:a positive mood enhances individual performance

Question 5

What does the research on moods find?

Answer 5

• sunshine increases market participants’ positive affect and increased willingness to accept risk
• wider bid/ask spreads on cloudy days (risk aversion)
• stock returns are significantly related to seasons

Question 6

What do Summers and Duxbury research on emotions?

Answer 6

Look at how emotions may be necessary causes of economic behaviour.

• Find that regret and rejoicing effect the disposition
• responsibility affects the behaviour of winners and losers

Question 7

What is neuroeconomics?

Answer 7

People use neurotechnology to examine brain activity while an individual is making decisions

• this overcomes the problem of whether a person is actually feeling an emotion
• it shows the connection between the parts of the brain for emotions and decisions

Question 8

What is the difference between nucleus accumbens and anterior insula?

Answer 8

Nucleus accumbens:processing info on gains and rewards (switching to risky assets)
Anterior insula:processing information on losses (switching to risk less assets)

Question 9

What are Elster’s 6 features of emotions?

Answer 9

• cognitive antecedents:emotions are triggered by belief
• intentional objects:emotions are about something (usually the cognitive antecedents) e.g your home/life
• physiological arousal:emotions are accompanied by changes in hormonal conditions (angry-hot and sweaty)
• physiological expressions:observable expressions characterise emotions (facial expressions/body language)
• valence:emotions can be put in a scale (pleasure-pain) but is it just one dimension?
• action tendencies:emotions are associated with tendencies to act