Abstract

http://ssrn.com/abstract=1266423
 
 

References (3)



 
 

Citations (12)



 


 



The Influence of Affect on Beliefs, Preferences and Financial Decisions


Camelia M. Kuhnen


University of North Carolina Kenan-Flagler Business School

Brian Knutson


Stanford University - Psychology

September 30, 2009

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
Neuroeconomics research shows that brain areas that generate emotional states also process information about risk, rewards, and punishments, suggesting that emotions influence financial decisions in a predictable and parsimonious way. We find that positive emotional states such as excitement induce people to take risk and to be confident in their ability to evaluate investment options, while negative emotions such as anxiety have the opposite effects. Beliefs are updated such as to maintain a positive emotional state by ignoring information that contradicts individuals’ prior choices. Marketplace features or outcomes of past choices may change emotions and thus influence future financial decisions.

Number of Pages in PDF File: 36

Keywords: affect, emotions, beliefs, risk taking, learning, limbic system, neuroeconomics, neurofinance

JEL Classification: C91, D81, G11

Accepted Paper Series





Download This Paper

Date posted: September 12, 2008 ; Last revised: October 8, 2009

Suggested Citation

Kuhnen, Camelia M. and Knutson, Brian, The Influence of Affect on Beliefs, Preferences and Financial Decisions (September 30, 2009). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: http://ssrn.com/abstract=1266423

Contact Information

Camelia M. Kuhnen (Contact Author)
University of North Carolina Kenan-Flagler Business School ( email )
Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
(919) 9623284 (Phone)
HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/kuhnenc/

Brian Knutson
Stanford University - Psychology ( email )
Stanford, CA 94305
United States
650 723 7431 (Phone)
650 725 5699 (Fax)
HOME PAGE: http://psychology.stanford.edu/~knutson
Feedback to SSRN


Paper statistics
Abstract Views: 1,417
Downloads: 414
Download Rank: 40,258
References:  3
Citations:  12
People who downloaded this paper also downloaded:
1. Motivating Innovation
By Gustavo Manso

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.313 seconds