Abstract

http://ssrn.com/abstract=539843
 
 

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Animal Spirits: Affective and Deliberative Processes in Economic Behavior


George Loewenstein


Carnegie Mellon University - Department of Social and Decision Sciences

Ted O'Donoghue


Cornell University - Department of Economics

May 4, 2004



Abstract:     
The economic conception of human behavior assumes that a person has a single set of well-defined goals, and that the person's behavior is chosen to best achieve those goals. We develop a model in which a person's behavior is the outcome of an interaction between two systems: a deliberative system that assesses options with a broad, goal-based perspective, and an affective system that encompasses emotions and motivational drives. Our model provides a framework for understanding many departures from full rationality discussed in the behavioral-economics literature, and captures the familiar feeling of being "of two minds." By focusing on factors that moderate the relative influence of the two systems, our model generates a variety of novel testable predictions.

Number of Pages in PDF File: 54

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Date posted: May 4, 2004  

Suggested Citation

Loewenstein, George and O'Donoghue, Ted, Animal Spirits: Affective and Deliberative Processes in Economic Behavior (May 4, 2004). Available at SSRN: http://ssrn.com/abstract=539843 or http://dx.doi.org/10.2139/ssrn.539843

Contact Information

George F. Loewenstein (Contact Author)
Carnegie Mellon University - Department of Social and Decision Sciences ( email )
Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)
Ted O'Donoghue
Cornell University - Department of Economics ( email )
414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-6287 (Phone)
607-255-2818 (Fax)
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