The Effect of Affect on Economic and Strategic Decision Making
The 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.
(This abstract was borrowed from another version of this item.)
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.:
- Paul M. Romer, 2000.
"Thinking and Feeling,"
American Economic Review,
American Economic Association, vol. 90(2), pages 439-443, May.
- Matthew Rabin., 1997.
"Psychology and Economics,"
Economics Working Papers
97-251, University of California at Berkeley.
- Benhabib, Jess & Day, Richard H, 1981. "Rational Choice and Erratic Behaviour," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 459-71, July.
- Laibson, David I., 2000.
"A Cue-Theory of Consumption,"
4481496, Harvard University 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.
- 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.
- 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.
- 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.
- Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March.
- 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.
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpmh:9912001. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If references are entirely missing, you can add them using this form.