Animal Spirits: Affective and Deliberative Processes in Economic Behavior
54 Pages Posted: 4 May 2004
Date Written: May 4, 2004
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.
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