PSY30400 Chapter Notes - Chapter 13: Risk Aversion
Chapter 13: Judgement, Decisions, and Reasoning
• People Inaccurately Predict their Emotions:
o Expected Emotions:
▪ those that people predict they will feel for a particular outcome
▪ One of the determinants of risk aversion
• the tendency to avoid taking risks
• Thing that increases risk aversion =
o tendency to believe that a particular loss will have a
greater impact than a gain of the same size
▪ Experiment comparing actual emotions to expected emotions
• actual effect of losing was substantially less than predicted, but
the positive effect of winning was only a little less than predicted
• In the end, the positive and negative emotions balanced out
o Why do people overestimate what their negative feelings will be?
▪ Reason =
• do not take into account the various coping mechanisms they may
use to deal with adversity
o Results from all of these experiments show that the inability to correctly predict
the emotional outcome of a decision can lead to inefficient decision making
• Incidental emotions affect decisions:
o Incidental Emotions:
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