Effects of Emotion on Decision-Making


Impact of Emotions on Decision-making

The research paper by Lerner et al (2004) sought to find out theeffect of emotion on various economic decisions. Economic decisionsin this context refer to individual decisions made by the concernedhouseholds regarding whether they can accept the selling price if itdoes not match the choice or buying price. For the purposes of thisstudy, the selling price was defined as the price that businesspeople have attached to their goods and services. The choice ofbuying price was the price that buyers were willing to pay for aparticular commodity or service. Emotions could affect the chances ofa buyer paying for a commodity that exceeds his choice price. Thisresearch started out on a mission to find out which emotions wouldinfluence the buyer to purchase (or not) a commodity that exceeds hischoice price. The study also looked at emotions that would pushsellers to increase their selling price.

Sadness has a distinct appraisal theme despite it being a negativeemotion. Sadness emanates from a state of depression and helplessnessand it evokes the goal of changing the situation. Sometimes, the urgeto change things could be so dire that it would push the affectedperson into a state of desperation.

When sellers are sad, they will make the decision to increase theselling price. For instance, if the businessperson just incurredsevere losses, he will be sad and he will be desperate to do anythingto change the situation. Taken in a larger scale, a source of sadnessin the economy- for instances losses due to political instability-will influence businesspeople to make the decision to increase theprices of goods and services. The aftermath will be inflation in theeconomy.

Sadness on the part of the buyers would influence them to make thedecision to buy more goods even when their prices are far beyond thechoice price. As mentioned earlier, sadness evokes the urge to changethe situation and buyers will think that acquiring more goods willchange the situation.

However, as it turns out, acquiring more goods might not change thesituation, instead, it leads to a deeper urge. This increaseddesperation will press the buyer to acquire even more goods. Thecycle continues and the buyer ends up spending more. On a largermagnitude, sadness will increase the purchasing power in the economybecause people will be rushing to acquire more goods as a means ofdealing with their sadness.

On the other hand, an emotion of disgust creates an impression of lowvalue in goods and services. When buyers are disgusted, they will settheir choice prices at an all-time low and they will not be willingto go any higher. When it comes to compulsive buyers, disgust createsa kind of depression that does not need more goods to kill it. Thiskind of depression appears to lurk within for quite some time.

When taken into account at the scale of an entire economy, adisgusting event will negatively impair buying prices. An event suchas the discovery of food-borne pathogens in a food store chain willreduce the value of the food in the eyes of the buyer. The effectwill spread to include food from other processers. The disgust willinfluence buyers to attach a feeling of little importance on thecommodity.


Lerner, J.S., Small, D.A. and Loewenstein, G., 2004. Heart stringsand purse strings carryover effects of emotions on economicdecisions. Psychological science, 15 (5), pp.337-341