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.

Positive Affect, Intertemporal Choice, and Levels of Thinking: Increasing Consumers' Willingness to Wait

This is the publisher version. Copyright 2011 by American Marketing Association.Six studies examine the influence of positive affect on self-control in intertemporal choice (consumers' willingness to wait for desired rewards) and the cognitive processes underlying this effect. Two studies measure participants' levels of thinking in two different ways, showing that positive affect can promote forward-looking, high-level thinking. Two studies using a delay-of-gratification paradigm demonstrate this forward-looking thinking and show it to be a mindful process. Participants in positive (vs. neutral) affect were more likely to choose a larger mail-in rebate over a smaller instant rebate when the reward differences were moderate (but not when they were small). Two studies demonstrate the impact of positive affect on intertemporal preference in another way, showing that participants in positive affect do not discount the value of delayed outcomes as much as people in neutral affect do (decreased present bias). Together, the results indicate that positive affect promotes cognitive flexibility and fosters a higher level of thinking and a more future-oriented time perspective, without obscuring practical considerations and other needed detail, including context and opportunity costs, when evaluating intertemporal options

The influence of positive affect and visual access on the discovery of integrative solutions in bilateral negotiation

The present study investigated the influence of positive affect and visual access on the process and outcome of negotiation in an integrative bargaining task. Visual access was crossed with positive affect in a 2 x 2 design. The results supported the hypotheses that positive affect would reduce the use of contentious tactics and would increase joint benefit, just as had been found for the presence of a barrier that eliminated visual access to the other negotiator (S. Lewis & W. Fry, 1977, Organizational Behavior and Human Performance 20, 75-92). This latter finding was also replicated. Only when bargainers were face to face and not in a positive state was there heavy use of contentious tactics, reduced trade-offs, and fewer integrative solutions. This means that positive affect can overcome the competitive processes and poor outcomes normally observed in face-to-face integrative bargaining. The results are discussed in terms of the cognitive dynamics of negotiation.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/26263/1/0000344.pd

Boss competence and worker well-being

Nearly all workers have a supervisor or “boss.” Yet little is known about how bosses influence the quality of employees’ lives. This study offers new evidence. First, the authors find that a boss’s technical competence is the single strongest predictor of a worker’s job satisfaction. Second, they demonstrate using longitudinal data, after controlling for fixed-effects, that even if a worker stays in the same job and workplace, a rise in the competence of a supervisor is associated with an improvement in the worker’s well-being. Third, the authors report a variety of robustness checks, including tentative instrumental variable results. These findings, which draw on U.S. and British data, contribute to an emerging literature on the role of “expert leaders” in organizations

Interaction, Emotion, and Collective Identities

[Excerpt] This chapter poses the question: How do emotional aspects of social interaction affect the emergence and salience of collective identities? I assume that social interaction inherently involves an implicit or explicit joint task—namely to accomplish some result that can only be produced with others. The most fundamental “task” of social interaction can be construed as the coordination and alignment of behavior, such that actors successfully conclude the interact ion episode. Essential to this task is a working consensus about definitions of self and other in the social situation, i.e., consensual self-other identities. A central component of my argument is that social interaction has emotional effects that vary with the success of actors at accomplishing this fundamental task. This paper theorizes the conditions under which emotional effects of social interaction promote collective identities that bridge or transcend self-other role identities