Intuition and affect in risk perception and decision making

Journal of Behavioral Decision Making, 2010

Although research has documented the importance of emotion in risk perception, little is known about it in the context of everyday life. Using the Experience Sampling Method (ESM), 94 part-time students were prompted at random—via cellular telephones—to report on mood state and three emotions and to assess risk on thirty occasions during their working hours. The emotions—valence, arousal, and dominance—were measured using self-assessment manikins (SAMs) (Bradley & Lang, 1994). Hierarchical linear models (HLM) revealed that mood state and emotions explained significant variance in risk perception. In addition, valence and arousal accounted for variance over and above “reason” (measured by severity and possibility of risks). Six risks were re-assessed in a post-experimental session and found to be lower than their real-time counterparts. The study demonstrates the feasibility and value of collecting representative samples of data with simple technology. Evidence is also provided to demonstrate the statistical consistency of the HLM estimates. Copyright © 2010 John Wiley & Sons, Ltd.

The aim of this study was to assess the role of specific emotions on risk perception providing a more stringent experimental test of the Appraisal Tendencies Framework (ATF). Consistent with expectations, angry and happy participants made more optimistic risk estimates than participants who were made sad. As hypothesized by ATF, happiness and anger also led people to somewhat higher certainty appraisals than sadness. However, this change in perception did not mediate the impact of emotions on risk estimates. Taken together, our results provide the evidence for causal role of specific emotions in risk perception and contribute to literature showing that the effects of emotion on judgment are not solely due to the valence of the experienced emotion. However, they also suggest that the processes underlying emotion effects remain in need for further specifications.

2009

Although research has documented the importance of emotion in risk perception, little is known about its prevalence in everyday life. Using the Experience Sampling Method, 94 part-time students were prompted at random-via cellular telephones-to report on mood state and three emotions and to assess risk on thirty occasions during their working hours. The emotionsvalence, arousal, and dominance-were measured using self-assessment manikins (Bradley & Lang, 1994). Hierarchical linear models (HLM) revealed that mood state and emotions explained significant variance in risk perception. In addition, valence and arousal accounted for variance over and above "reason" (measured by severity and possibility of risks). Six risks were reassessed in a post-experimental session and found to be lower than their real-time counterparts. The study demonstrates the feasibility and value of collecting representative samples of data with simple technology. Evidence for the statistical consistency of the HLM estimates is provided in an Appendix.

2014

Intuition is a fast expanding topic in today's economic and psychological literature. However, no consensus has been reached concerning its value in decision making. To investigate the relevance of intuitive choices in decision-making under risk, we conducted an experiment on 154 French high-school students from 3 different academies in the Ile-de-France department. Using response time as a proxy for intuition, we found that on average decisions made intuitively yielded results as beneficial as or even more so than decisions made analytically for most of the choices.

Journal of Behavioral Decision Making, 2009

In three studies we addressed the impact of perceived risk and negative affect on risky choice. In Study 1, we tested a model that included both perceived risk and negative affect as predictors of risky choice. Study 2 and Study 3 replicated these findings and examined the impact of affective versus cognitive processing modes. In all the three studies, both perceived risk and negative affect were shown to be significant predictors of risky choice. Furthermore, Study 2 and Study 3 showed that an affective processing mode strengthened the relation between negative affect and risky choice and that a cognitive processing mode strengthened the relation between perceived risk and risky choice. Together, these findings show support for the idea of a dual-process model of risky choice.

2001

Abstract 1. Virtually all current theories of choice under risk or uncertainty are cognitive and consequentialist. They assume that people assess the desirability and likelihood of possible outcomes of choice alternatives and integrate this information through some type of expectation-based calculus to arrive at a decision. The authors propose an alternative theoretical perspective, the risk-as-feelings hypothesis, that highlights the role of affect experienced at the moment of decision making.

2008

Abstract A large literature emphasizes the different roles that risk aversion, aversion to ambiguity, and regret may have in explaining behavior. These preference parameters have been largely regarded as unrelated and meant to capture features of individual preferences towards different dimensions of the uncertainty that people face. Using information on a large sample of individual investors, we find that these attitudes tend to be correlated: individuals who dislike risk also dislike ambiguity and are more regret prone.

2019

The Decision making has become an integral part of modern management. Sound, rational and quick decision making is the primary job for any manager. The Decision making involves choosing of the option from all the available alternatives. This selection can be done based on available data or past experience or gut feeling. The difference between gut feeling and Intuition is very thin. Any decision taken based on Intuition is more scientific in nature, however, it requires a skill for any decision maker. Lot of research has been done on the managerial decision making and the decisions based on Intuition. A great amount of work has also been done separately on the intuition. Hence the efforts have been made in this paper to compile the literature review and find out the research gap and based on which the future course for research can be

Recent advances in social cognitive neuroscience and related fields have rejuvenated scholarly research into intuition. This article considers the implications of these developments for understanding managerial and organizational decision making. Over the past two decades, researchers have made considerable progress in distinguishing intuition from closely-related constructs such as instinct and insight and the interplay between these non-conscious forms of cognition and explicit reasoning processes is now better understood. In the wake of significant theoretical and methodological convergence centred on dual-process theories of reasoning, judgment and social cognition, supported by functional magnetic resonance imaging (fMRI) studies, several of the foundational assumptions underpinning classic theories and frameworks in strategic management and entrepreneurship research are being called into question. Old models based on a simplistic left brain/right brain dichotomy are giving way to more sophisticated conceptions, in which intuitive and analytical approaches to decision making are underpinned by complex neuropsychological systems. In the light of these advances, the authors offer their reflections on what this all means for the assessment, development and management of intuition in the workplace.

Trends in Cognitive Sciences, 2009

Many models of judgment and decision-making posit distinct cognitive and emotional contributions to decision-making under uncertainty. Cognitive processes typically involve exact computations according to a costbenefit calculus, whereas emotional processes typically involve approximate, heuristic processes that deliver rapid evaluations without mental effort. However, it remains largely unknown what specific parameters of uncertain decision the brain encodes, the extent to which these parameters correspond to various decision-making frameworks, and their correspondence to emotional and rational processes. Here, I review research suggesting that emotional processes encode in a precise quantitative manner the basic parameters of financial decision theory, indicating a reorientation of emotional and cognitive contributions to risky choice.