The Ability to Follow Your Gut: Emotion-Understanding Ability Leverages Feelings to Avoid Risk

Posted: 12 Oct 2014 Last revised: 28 Oct 2014

See all articles by Jeremy Yip

Jeremy Yip

University of Pennsylvania - Operations & Information Management Department

Stéphane Côté

University of Toronto - Rotman School of Management

Dana Rose Carney

University of California, Berkeley - Haas School of Business

Date Written: October 10, 2014

Abstract

Emotional intelligence facilitates decision-making about risk. We propose that emotionally intelligent individuals make better decisions because they adaptively use their immediate feelings as a source of information about different decision options. We examine whether emotion-understanding ability (a primary dimension of emotional intelligence) helps individuals rely on their skin-conductance responses as signals about the potential danger associated with risky decision options. By correctly identifying the source of their skin-conductance responses, individuals with higher emotion-understanding ability use their feelings as relevant information to avoid choosing risky decision options. As predicted, we find that individuals with higher emotion-understanding ability exhibited a stronger association between skin-conductance responses and avoidance of risky options in the Iowa Gambling Task, relative to individuals with lower emotion-understanding ability. We also find that emotional intelligence enhances decision-making independently of cognitive intelligence. These results suggest that emotional intelligence enables individuals to use their feelings adaptively to guide decisions about risk.

Keywords: risk, decision-making, emotional intelligence, emotion understanding, skin-conductance response

Suggested Citation

Yip, Jeremy and Cote, Stephane and Carney, Dana Rose, The Ability to Follow Your Gut: Emotion-Understanding Ability Leverages Feelings to Avoid Risk (October 10, 2014). Rotman School of Management Working Paper No. 2508444. Available at SSRN: https://ssrn.com/abstract=2508444

Jeremy Yip (Contact Author)

University of Pennsylvania - Operations & Information Management Department ( email )

Philadelphia, PA 19104
United States
215-573-0501 (Phone)

Stephane Cote

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Dana Rose Carney

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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