The Effect of Affect and Economic and Strategic Decision Making
AbstractThe standard economic model of decision making assumes a decision maker makes her choices to maximize her utility or happiness. Her current emotional state is not explicitly considered. Yet there is a large psychological literature that shows that current emotional state, in particular positive affect, has a significant effect on decision making. This paper offers a way to incorporate this insight from psychology into economic modeling. Moreover, this paper shows that this simple insight can parsimoniously explain a wide variety of behaviors.
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Bibliographic InfoPaper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt4fn1b57s.
Date of creation: 01 Dec 1999
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affect; morale; emotion; Social and Behavioral Sciences;
Other versions of this item:
- Benjamin E. Hermalin and Alice M. Isen., 1999. "The Effect of Affect on Economic and Strategic Decision Making," Economics Working Papers E99-270, University of California at Berkeley.
- Benjamin E. Hermalin & Alice M. Isen, 2000. "The Effect of Affect on Economic and Strategic Decision Making," Method and Hist of Econ Thought 9912001, EconWPA.
- Benjamin E. Hermalin & Alice M. Isen, 2000. "The Effect of Affect on Economic and Strategic Decision Making," Econometric Society World Congress 2000 Contributed Papers 1136, Econometric Society.
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
- D99 - Microeconomics - - Intertemporal Choice - - - Other
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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