Emotion and risk: how mood can shape a decision
A difficult negotiation or an operational incident may immediately precede a decision unrelated to that event. The managerial question is specific: how can we avoid mistaking a passing emotion for a property of the risk being assessed?
What the literature establishes
Jennifer S. Lerner and Dacher Keltner (2001, Journal of Personality and Social Psychology) show that fear and anger can shape risk assessments differently: fear towards more pessimistic assessments, anger towards more optimistic ones. Their research links this difference to the perceptions of certainty and control associated with these emotions. Simply distinguishing a positive emotional state from a negative one is therefore insufficient to understand its influence.
An emotion can move between decisions
Jennifer S. Lerner, Deborah A. Small and George Loewenstein (2004, Psychological Science) induced emotions before asking participants to make economic decisions about an object. Sadness and disgust altered valuations, even though their source was unrelated to that object. This experiment establishes the possibility of carryover: an emotion originating elsewhere can influence the decision at hand.
The premature conclusion
One might conclude that decisions should be made without emotion, or that every decision following a difficult episode should be postponed. These studies demonstrate neither that such neutrality is possible nor that postponement systematically improves decisions. Concern can also signal a genuine problem: the task is to distinguish what provides information about the decision from what stems from another event. (our executive and employee training programmes)
What the evidence does not allow us to prescribe
These findings provide neither a universal waiting period for restoring reliable judgement nor a validated protocol for executive committees. Experimental tasks do not reproduce the regulatory responsibilities, incentives and interactions of organisational decisions. Asking participants to name their emotion may make the context more explicit; it does not prove that its influence disappears.
A practical check in Zurich
Within SHR's “Decision-making” programme, one possible exercise for financial services, insurance, tech and the European headquarters of international groups in Zurich is to document a series of comparable decisions. Before discussion, each decision-maker confidentially records their risk assessment, its main factual basis and any outside event affecting their emotional state; at a review scheduled in advance, they reassess the same case while keeping new information separate. The measure is the proportion of assessments revised without any new fact being recorded, distinguishing cases with and without a reported emotional event. This record checks the stability of judgements and opens a discussion about their grounds; on its own, it measures neither a causal effect of emotions nor the eventual quality of decisions. To go further: explore the Decision-making training in Zurich, or browse our executive and employee training programmes in Switzerland.
In pictures: Decision-making in Zurich
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