Anticipatory Affect and Financial Risk Taking

Stanford University, Stanford CA

Investigators

Abstract

Can emotion influence decision-making, and if so, how? Emotional appeals pervade advertising, marketing, and politics. While some of these appeals convey relevant information about associated products or messages, others feature apparently unrelated items (e.g., a fashion model near a sports car). From the viewpoint of a strictly rational actor, if these unrelated emotional stimuli provide no useful additional information, they should not influence decisions related to the product or message under consideration. Yet, particularly in situations involving minimal reflective processing, researchers have demonstrated that incidental emotional stimuli may influence attitudes and even behavior. However, little is known about the physiological underpinnings, the timecourse, the specificity, or the limits of this potential influence. With support from the National Science Foundation, Dr. Brian Knutson and colleagues at Stanford University will investigate how emotions that occur during anticipation of outcomes (i.e., "anticipatory affect") influence financial risk taking. Using behavioral testing and brain imagining techniques (functional magnetic resonance imaging), the investigators will test a model of anticipatory affect that predicts that: (1) positive arousal (e.g., "excitement") promotes risk seeking; (2) negative arousal (e.g., "anxiety") promotes risk aversion; and (3) anticipatory affect has a stronger influence on financial risk taking when cognitive reflection is minimal. Findings from these studies will integrate cognitive and affective neuroscience, inform decision theory, and advance neuroimaging methods for testing causal models. By advancing scientific understanding of human decision making, the findings may eventually inform policy related to decision making in financial, health, and welfare domains. Understanding how emotions guide decisions is important for accurate models of consumer spending, understanding the phenomenon of popular fads, and has the potential to provide insight into compulsive shopping or gambling. The studies will engage a diverse group of interdisciplinary students ranging from undergraduates to postdoctoral fellows, providing them with skills that will promote their future research expertise and development.