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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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
Date of revision:
Contact details of provider:
Postal: F502 Haas, Berkeley CA 94720-1922
Phone: (510) 642-1922
Fax: (510) 642-5018
Web page: http://www.escholarship.org/repec/iber_econ/
More information through EDIRC
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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benhabib, Jess & Day, Richard H, 1981. "Rational Choice and Erratic Behaviour," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 459-71, July.
- W. Bentley MacLeod, 1996.
"Decision, Contract and Emotion: Some Economics for a Complex and Confusing World,"
Boston College Working Papers in Economics
336., Boston College Department of Economics.
- W. Bentley MacLeod, 1996. "Decision, Contract, and Emotion: Some Economics for a Complex and Confusing World," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 788-810, November.
- Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March.
- Matthew Rabin., 1997.
"Psychology and Economics,"
Economics Working Papers
97-251, University of California at Berkeley.
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- David Laibson, 2001.
"A Cue-Theory Of Consumption,"
The Quarterly Journal of Economics,
MIT Press, vol. 116(1), pages 81-119, February.
- Romer, Paul M., 2000.
"Thinking and Feeling,"
1618, Stanford University, Graduate School of Business.
- Kaufman, Bruce E., 1999. "Emotional arousal as a source of bounded rationality," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 135-144, February.
- Shira B. Lewin, 1996. "Economics and Psychology: Lessons for Our Own Day from the Early Twentieth Century," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1293-1323, September.
- James, Harvey S., Jr. & Chymis, Athanasios G., 2004. "Are Happy People Ethical People? Evidence From North America And Europe," Working Papers 26034, University of Missouri Columbia, Department of Agricultural Economics.
- Kirchsteiger, Georg & Rigotti, Luca & Rustichini, Aldo, 2006. "Your morals might be your moods," Journal of Economic Behavior & Organization, Elsevier, vol. 59(2), pages 155-172, February.
- Konstantinos Drakos, 2009.
"Security Economics: A Guide for Data Availability and Needs,"
Economics of Security Working Paper Series
6, DIW Berlin, German Institute for Economic Research.
- Konstantinos Drakos, 2011. "Security Economics: A Guide For Data Availability And Needs," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(2), pages 147-159.
- Christos Kallandranis & Konstantinos Drakos, 2012. "Security Economics: A Guide for Data Availability and Needs," EUSECON Policy Briefing 16, DIW Berlin, German Institute for Economic Research.
- Lucy F. Ackert & Jorge Martinez-Vazquez & Mark Rider, 2004.
"Tax policy design in the presence of social preferences: some experimental evidence,"
2004-33, Federal Reserve Bank of Atlanta.
- Lucy F. Ackert & Jorge Martinez-Vazquez & Mark Rider, 2004. "Tax Policy Design in The Presence of Social Preferences: Some Experimental Evidence," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0425, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Lucy F. Ackert & Bryan K. Church & Richard Deaves, 2003. "Emotion and financial markets," Economic Review, Federal Reserve Bank of Atlanta, issue Q2, pages 33-41.
- Kirchsteiger, G. & Rigotti, L. & Rustichini, A., 2000.
"Your Morals are Your Moods,"
2000-122, Tilburg University, Center for Economic Research.
- Georg Kirchsteiger & Luca Rigotti & Aldo Rustichini, 2006. "Your Morals are Your Moods," ULB Institutional Repository 2013/149584, ULB -- Universite Libre de Bruxelles.
- Georg Kirchsteiger & Luca Rigotti & Aldo Rustichini, 2001. "Your Morals Are Your Moods," Game Theory and Information 0012005, EconWPA.
- Kirchsteiger, Georg & Rigotti, Luca & Rustichini, Aldo, 2001. "Your Morals Are Your Moods," Department of Economics, Working Paper Series qt5fh525g8, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Georg Kirchsteiger, Luca Rigotti and Aldo Rustichini., 2001. "Your Morals Are Your Moods," Economics Working Papers E01-294Rev, University of California at Berkeley.
- Mohanty, Madhu S. & Ullah, Aman, 2012. "Direct and indirect effects of happiness on wage: A simultaneous equations approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 143-152.
- Hakan Berument & Onur Ince & Eray Yucel, 2006.
"Success in soccer and economic performance: Evidence from beŞİktaŞ-Turkey,"
International Review of Economics,
Springer, vol. 53(2), pages 260-274, June.
- Hakan Berument & M. Eray Yücel & Onur Ince, 2005. "Success in Soccer and Economic Performance : Evidence from Besiktas-Turkey," Departmental Working Papers 0507, Bilkent University, Department of Economics.
- Stephan Meier & Alois Stutzer, 2008.
"Is Volunteering Rewarding in Itself?,"
London School of Economics and Political Science, vol. 75(297), pages 39-59, 02.
- Meier, Stephan & Stutzer, Alois, 2004. "Is Volunteering Rewarding in Itself?," IZA Discussion Papers 1045, Institute for the Study of Labor (IZA).
- Stephan Meier & Alois Stutzer, . "Is Volunteering Rewarding in Itself?," IEW - Working Papers 180, Institute for Empirical Research in Economics - University of Zurich.
- De Figueiredo, John M. & De Figueiredo, Rui J. P. Jr., 2002. "Managerial Decision-Making in Non-Market Environments: A Survey Experiment," Working papers 4246-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Dragone, Davide & Viviani, Michele, 2007. "Cultura Organizzativa e Sostenibilita' della Governance Multistakeholder," AICCON Working Papers 40-2007, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff).
If references are entirely missing, you can add them using this form.