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Monday, September 04, 2006

Emotional Biases and Cognitive Rationality? Think Again…

We commonly assume that if we are to behave rationally, we should better rely on cognitive decision making processes, such as balancing reasons, processing facts, calculating cost-benefits, and predicting statistical risks. Three business school professors, Leonard Lee (Columbia), On Amir (UCSD) and Dan Ariely (MIT) have posted on SSRN their article, In Search of Homo Economicus: Preference Consistency, Emotions, and Cognition, where they present findings from three experiments pointing to higher transitivity in emotional decision making systems than in cognitive processes. Rational behavior (calculated, forward looking, long term plan, self-control, value maximization) is commonly attributed to the cognitive, reason-based processes, while irrationalities (impulsivity, myopic, transitory behavior) is assumed to be aligned with emotional, feeling based judgments. This new study shows however that emotion based judgments manifest greater preference consistency over time, as compared to cognitive processes, suggesting better prediction of behavior in the former. They show that when participants relied on their emotional system – encoding reality in images, metaphors, narratives, rather than words, numbers and symbols – they acted more consistently and had fewer transitivity violations. In another experiment, they also show that participants that were under higher cognitive load (had to remember a long sequence of numbers) made fewer transitivity errors than those who ostensibly had more cognitive resources to process the decision problems.

Here’s the abstract.

Understanding the roles of emotion and cognition in forming preferences is critical in helping firms choose effective marketing strategies and consumers make appropriate consumption decisions. In this work, we investigate the role of the emotional and cognitive systems in preference consistency (transitivity). Participants were asked to make a set of binary choices under conditions that were aimed to tap emotional versus cognitive decision processes. The results of three experiments consistently indicate that automatic affective responses are associated with higher levels of preference transitivity than deliberate cognitive considerations, and suggest that the basis of this central aspect of rational behavior - transitivity - lies in the limbic system rather than the cortical system.

As Solum would say, Download it while it's HOT!

Posted by Orly Lobel on September 4, 2006 at 04:23 PM | Permalink


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I've been on the road for the last few days, and I'm not really conscious, but a quick note to John and Another Reader: of course my comment was premature. I did preface it by noting that I hadn't read it yet, you know...

Posted by: Paul Gowder | Sep 10, 2006 5:37:04 PM

Thank you Prof. Lobel for this interesting post. I have read the paper and find myself rethinking much of my previous thoughts on these matters. In particular, I find myself wandering how many times did I actively suppress my feelings regarding a decision hoping to do the "right" thing...

To: Paul Gowder - I agree with "Another reader" that you are confusing thoughts and propositions with facts and evidence. I am grateful for any opportunity to learn which of our lay theories of the world is actually substantiated by systematic evidence.

To: Another reader - After reading the paper I can only assume you are commenting on Paul Gowder's comment - I suggest you clarify who you are responding to in the future.

Posted by: John A. | Sep 5, 2006 11:28:36 PM

As someone who tries to keep up with the psychology literature, it does seem like your comment may be premature. There is little evidence that what you state is obvious really is. In what sense are "emotionally-rooted values" stronger? Does a decision to be honest not whistand more scrutiny than ones tendency to avoid carbonated drinks, because they feel "fuzzy"? It is also not very clear to me that the latter is obviously more consistent across time - does Champagne fall into the same category?
I try to stay away from calling propositions obvious until they are supported by strong logical arguments, or better yet, data...

Posted by: Another reader | Sep 5, 2006 2:02:25 PM

Interesting. Having not read it yet, it seemslike this could either be ground-breaking stuff or a clever way of restating the obvious proposition that emotionally-rooted values are more strongly held than values reached by (uncertain, un-salient) intellectual processes.

Posted by: Paul Gowder | Sep 5, 2006 10:47:54 AM

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