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Models of affective decision-making: how do feelings predict choice?

Author

Listed:
  • Charpentier, Caroline J.
  • Neve, Jan-Emmanuel De
  • Roiser, Jonathan P.
  • Sharot, Tali

Abstract

Intuitively, how we feel about potential outcomes will determine our decisions. Indeed, one of the most influential theories in psychology, Prospect Theory, implicitly assumes that feelings govern choice. Surprisingly, however, we know very little about the rules by which feelings are transformed into decisions. Here, we characterize a computational model that uses feelings to predict choice. We reveal that this model predicts choice better than existing value-based models, showing a unique contribution of feelings to decisions, over and above value. Similar to Prospect Theory value function, feelings showed diminished sensitivity to outcomes as value increased. However, loss aversion in choice was explained by an asymmetry in how feelings about losses and gains were weighed when making a decision, not by an asymmetry in the feelings themselves. The results provide new insights into how feelings are utilized to reach a decision.

Suggested Citation

  • Charpentier, Caroline J. & Neve, Jan-Emmanuel De & Roiser, Jonathan P. & Sharot, Tali, 2016. "Models of affective decision-making: how do feelings predict choice?," LSE Research Online Documents on Economics 66420, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:66420
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    File URL: http://eprints.lse.ac.uk/66420/
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    Citations

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    Cited by:

    1. Sebastian Bobadilla-Suarez & Cass R. Sunstein & Tali Sharot, 2017. "The intrinsic value of choice: The propensity to under-delegate in the face of potential gains and losses," Journal of Risk and Uncertainty, Springer, vol. 54(3), pages 187-202, June.
    2. repec:cup:judgdm:v:12:y:2017:i:1:p:81-89 is not listed on IDEAS
    3. Heutel, Garth, 2019. "Prospect theory and energy efficiency," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 236-254.
    4. Sumitava Mukherjee & Arvind Sahay & V. S. Chandrasekhar Pammi & Narayanan Srinivasan, 2017. "Is loss-aversion magnitude-dependent? Measuring prospective affective judgments regarding gains and losses," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(1), pages 81-89, January.
    5. Wojciech Białaszek & Przemysław Marcowski & David J Cox, 2020. "Comparison of multiplicative and additive hyperbolic and hyperboloid discounting models in delayed lotteries involving gains and losses," PLOS ONE, Public Library of Science, vol. 15(5), pages 1-18, May.

    More about this item

    Keywords

    decision-making; feelings; subjective well-being; value; utility; Prospect theory;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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