際際滷

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G E O R G E L O E W E N S T E I N & J E L S T E R
Feelings/ Emotions
& Decision Making
1 Channel Many Channels
What do you Choose?
2
5 Jams 24 Jams/ Shelf full
What do you Choose?
Source: The Art of Choosing  Sheena Iyengar
3
5 Jams 24 Jams/ Shelf full
What do you Choose?
Source: The Art of Choosing  Sheena Iyengar
Regret
4
Silver Medal Bronze Medal
What do you Choose?
Source: The Paradox of Choice  Barry Schwartz
5
NOBEL PRIZE - 1978
SATISFICING
BOUNDED RATIONALITY
LIMITATIONS OF
- TIME
- KNOWLEDGE
- COGNITIVE CAPABILITIES
The Carnegie School
6
ORGANIZATIONS
 SIMON & MARCH (1958)
- R O U T I N E S
- R O L E O F I N D U C E M E N T S
- C O N F L I C T S ( B R E A K - D O W N I N D M )
BEHAVIORAL THEORY OF FIRM
 MARCH & CYERT (1963)
- O R G C A P A B I L I T I E S
- S E A R C H C O S T S
- P R O C E S S - O R I E N T E D M O D E L S
The Carnegie School
7
GEORGE LOEWENSTEIN
-H E R B E R T S I M O N P R O F O F E C O &
P S Y C H
- P H D I N E C O N O M I C S ( Y A L E )
- R E S E A R C H I N T E R E S T S
- Intersection of Economics/ Psychology
- Inter-temporal choice in Economics
- Visceral States
- Negotiations/ Impasse
The Carnegie School
8
GEORGE LOEWENSTEIN
RISKS AS FEELINGS
- A N T I C I P A T O R Y F E E L I N G S
- S E C T I O N I - A S S U M P T I O N S
- Optimistic Vs. Pessimistic
- Here & Now Vs. Forward Looking
The Carnegie School
9
GEORGE LOEWENSTEIN
RISKS AS FEELINGS (CONTD..)
- S E C T I O N I I  C O N D I T I O N S
- Emotions & Probability sensitivity
- Inter-temporal
- Vividness
- Evolutionary Preparedness
- S E C T I O N I I I  I M P L I C A T I O N S
- Gender studies
- Age studies
- Policy Implications
The Carnegie School
10
JON ELSTER - NORWEGIAN
SOCIAL & POLITICAL THEORIST
- Philosophy of SOCIAL SCIENCE
- Rational choice theory
- In recent years gone sour on Rational choice/
disillusioned with Power of reason
- Recent book  Explaining social behavior
Emotions &
Economic Theory
11
JON ELSTER
EMOTIONS (VS. VISCERAL
FACTORS)
- Have intentional object
- Have somatic markers
- Have valence (pleasure/ pain)
- Have associated action tendencies
- Can avoid (but at a cost!)
- Can build/ plan Emotional Character
Emotions &
Economic Theory
12
EMOTIONS & NEUROBIOLOGY
OF DECISION MAKING
- Help avoid procrastination
- Help take best decisions
- Helps deal with addiction to reason
- Help avoid Opportunity costs
- Evidence? Patients with injuries to frontal
lobes
Emotions &
Economic Theory
13
EMOTIONS IMPACT
- Sense of Satisfaction
- Quality of Decisions
- Perception of alternatives
- Self-image/Self-esteem
EMOTIONS SUSCEPTIBLE TO:
(SOURCE: NUDGE  THALER & SUNSTEIN)
- Peer Pressure/ conformity
- Temptations
- Biases & Blunders
Emotions &
Economic Theory
14
Choice 1 Choice 2
Acknowledge the reality that
both emotions and logic
have a role to play in
decision making?
Acknowledge limits to
human cognition, emotions,
time and knowledge?
Be Satisficed?
Invest an inordinate amount of
time, effort and mind space on
finding the best outcome?
Ignore limitations of human
cognition, time, etc?
Risk inordinately higher search,
cognitive, emotional costs?
Be Maximized?
What do you Choose?
Which choice is more rational?!
We dont know what we dont know - Hayek
15
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Emotions & Behavioral Economics

  • 1. G E O R G E L O E W E N S T E I N & J E L S T E R Feelings/ Emotions & Decision Making
  • 2. 1 Channel Many Channels What do you Choose? 2
  • 3. 5 Jams 24 Jams/ Shelf full What do you Choose? Source: The Art of Choosing Sheena Iyengar 3
  • 4. 5 Jams 24 Jams/ Shelf full What do you Choose? Source: The Art of Choosing Sheena Iyengar Regret 4
  • 5. Silver Medal Bronze Medal What do you Choose? Source: The Paradox of Choice Barry Schwartz 5
  • 6. NOBEL PRIZE - 1978 SATISFICING BOUNDED RATIONALITY LIMITATIONS OF - TIME - KNOWLEDGE - COGNITIVE CAPABILITIES The Carnegie School 6
  • 7. ORGANIZATIONS SIMON & MARCH (1958) - R O U T I N E S - R O L E O F I N D U C E M E N T S - C O N F L I C T S ( B R E A K - D O W N I N D M ) BEHAVIORAL THEORY OF FIRM MARCH & CYERT (1963) - O R G C A P A B I L I T I E S - S E A R C H C O S T S - P R O C E S S - O R I E N T E D M O D E L S The Carnegie School 7
  • 8. GEORGE LOEWENSTEIN -H E R B E R T S I M O N P R O F O F E C O & P S Y C H - P H D I N E C O N O M I C S ( Y A L E ) - R E S E A R C H I N T E R E S T S - Intersection of Economics/ Psychology - Inter-temporal choice in Economics - Visceral States - Negotiations/ Impasse The Carnegie School 8
  • 9. GEORGE LOEWENSTEIN RISKS AS FEELINGS - A N T I C I P A T O R Y F E E L I N G S - S E C T I O N I - A S S U M P T I O N S - Optimistic Vs. Pessimistic - Here & Now Vs. Forward Looking The Carnegie School 9
  • 10. GEORGE LOEWENSTEIN RISKS AS FEELINGS (CONTD..) - S E C T I O N I I C O N D I T I O N S - Emotions & Probability sensitivity - Inter-temporal - Vividness - Evolutionary Preparedness - S E C T I O N I I I I M P L I C A T I O N S - Gender studies - Age studies - Policy Implications The Carnegie School 10
  • 11. JON ELSTER - NORWEGIAN SOCIAL & POLITICAL THEORIST - Philosophy of SOCIAL SCIENCE - Rational choice theory - In recent years gone sour on Rational choice/ disillusioned with Power of reason - Recent book Explaining social behavior Emotions & Economic Theory 11
  • 12. JON ELSTER EMOTIONS (VS. VISCERAL FACTORS) - Have intentional object - Have somatic markers - Have valence (pleasure/ pain) - Have associated action tendencies - Can avoid (but at a cost!) - Can build/ plan Emotional Character Emotions & Economic Theory 12
  • 13. EMOTIONS & NEUROBIOLOGY OF DECISION MAKING - Help avoid procrastination - Help take best decisions - Helps deal with addiction to reason - Help avoid Opportunity costs - Evidence? Patients with injuries to frontal lobes Emotions & Economic Theory 13
  • 14. EMOTIONS IMPACT - Sense of Satisfaction - Quality of Decisions - Perception of alternatives - Self-image/Self-esteem EMOTIONS SUSCEPTIBLE TO: (SOURCE: NUDGE THALER & SUNSTEIN) - Peer Pressure/ conformity - Temptations - Biases & Blunders Emotions & Economic Theory 14
  • 15. Choice 1 Choice 2 Acknowledge the reality that both emotions and logic have a role to play in decision making? Acknowledge limits to human cognition, emotions, time and knowledge? Be Satisficed? Invest an inordinate amount of time, effort and mind space on finding the best outcome? Ignore limitations of human cognition, time, etc? Risk inordinately higher search, cognitive, emotional costs? Be Maximized? What do you Choose? Which choice is more rational?! We dont know what we dont know - Hayek 15