Emotions play a significant role in decisionmaking from "summary" of Misbehaving by Richard H Thaler
In the world of economics, emotions have long been considered an unwelcome intruder. The prevailing view was that people make decisions based on rational calculations, weighing the costs and benefits of each option before choosing the one that maximizes their utility. However, this assumption ignores the reality that humans are not always rational beings. Emotions can often cloud our judgment, leading us to make decisions that are not in our best interest. One of the key insights of behavioral economics is that emotions play a significant role in decision-making. Our feelings and emotions can influence the choices we make, sometimes leading us astray. For example, we may choose to stay in a failing relationship because we are afraid of being alone, or we may continue to invest in a failing stock because we are too proud to admit that we made a mistake. In both cases, emotions are driving our decision-making process, often to our detriment. Emotions can also affect our perceptions of risk and reward. When we are feeling anxious or fearful, we are more likely to perceive a situation as risky, even if the actual level of risk is relatively low. On the other hand, when we are feeling confident or optimistic, we may underestimate the potential downsides of a decision. These emotional biases can lead us to make choices that are not in our best interest, simply because we are not thinking clearly. It is important to recognize the role that emotions play in decision-making and to take steps to mitigate their influence. By being aware of our emotional state and taking the time to consider our options carefully, we can make more informed choices that align with our long-term goals. This may involve seeking advice from others, taking a step back to evaluate our decisions objectively, or simply giving ourselves time to cool off before making a choice.- Emotions are a natural part of the human experience, and it is unrealistic to expect that we can completely eliminate them from our decision-making process. However, by acknowledging their presence and taking steps to counteract their influence, we can make better choices that are more likely to lead to positive outcomes. In the complex world of decision-making, emotions are a factor that cannot be ignored.
