Differentiating Approach and Avoidance from Traditional Notions of Sentiment in Economic Contexts

14 Pages Posted: 6 Feb 2022

See all articles by Jacob Turton

Jacob Turton

University College London - Department of Computer Science

Ali Kabiri

University of Buckingham - Department of Economics and International Studies; Financial Markets Group - LSE

David Tuckett

University College London - Centre for the Study of Decision-Making Uncertainty

Robert Elliott Smith

University College London

David Vinson

University College London - Centre for the Study of Decision-Making Uncertainty

Date Written: December 17, 2021

Abstract

There is growing interest in the role of sentiment in economic decision-making. However, most research on the subject has focused on positive and negative valence. Conviction Narrative Theory (CNT) places Approach and Avoidance sentiment (that which drives action) at the heart of real-world decision-making, and argues that it better captures emotion in financial markets. This research, bringing together psychology and machine learning, introduces new techniques to differentiate Approach and Avoidance from positive and negative sentiment on a fundamental level of meaning. It does this by comparing word-lists, previously constructed to capture these concepts in text data, across a large range of semantic features. The results demonstrate that Avoidance in particular is well defined as a separate type of emotion, which is evaluative/cognitive and action-orientated in nature. Refining the Avoidance word-list according to these features improves macroeconomic models, suggesting that they capture the essence of Avoidance and that it plays a crucial role in driving real-world economic decision-making.

Keywords: Sentiment, Decision-making, Approach, Avoidance, Conviction Narrative Theory

Suggested Citation

Turton, Jacob and Kabiri, Ali and Tuckett, David and Smith, Robert Elliott and Vinson, David, Differentiating Approach and Avoidance from Traditional Notions of Sentiment in Economic Contexts (December 17, 2021). Available at SSRN: https://ssrn.com/abstract=3987591 or http://dx.doi.org/10.2139/ssrn.3987591

Jacob Turton

University College London - Department of Computer Science ( email )

United Kingdom

Ali Kabiri (Contact Author)

University of Buckingham - Department of Economics and International Studies ( email )

United States

Financial Markets Group - LSE ( email )

Houghton Street
London WC2A 2AE
United Kingdom

David Tuckett

University College London - Centre for the Study of Decision-Making Uncertainty ( email )

Gower Street
London, WC1 6BT
United Kingdom

HOME PAGE: http://www.ucl.ac.uk/psychoanalysis/unit-staff/david.htm

Robert Elliott Smith

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

David Vinson

University College London - Centre for the Study of Decision-Making Uncertainty ( email )

Gower Street
London, WC1 6BT
United Kingdom

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