Consequential decisions: when an unrelated emotion influences judgement
A manager may review an investment after a difficult personal conversation that has nothing to do with the proposal. The management question is specific: how can an emotion unrelated to the decision be prevented from being mistaken for information about its value or risk?
What the literature establishes
Jennifer Lerner, Deborah Small and George Loewenstein (2004, Psychological Science) demonstrated experimentally that emotions induced before a transaction, and unrelated to it, can alter the prices at which participants are willing to buy or sell. Sadness and disgust do not have the same effects on these valuations. This finding establishes the possibility of emotional carryover, not a rule for predicting the price a manager will accept in an actual transaction.
The mechanism: an emotion also changes how a situation is interpreted
Jennifer Lerner and Dacher Keltner (2001, Journal of Personality and Social Psychology) show that fear and anger, although both unpleasant, are associated with different judgements of risk. Their findings support a mechanism involving the appraisals of certainty and control that accompany these emotions. Simply asking whether a decision-maker is in a “good or bad mood” therefore misses an important distinction.
The premature conclusion
One might conclude that people should wait until they feel nothing before making a decision. These studies justify neither that ideal of neutrality nor the exclusion of emotions that genuinely provide information about the matter at hand. The useful distinction concerns their source: concern about inadequate collateral should not be treated in the same way as concern arising from an event unrelated to the investment. (our executive and employee training programmes)
The limits of the evidence and of familiar practices
These studies are not trials of decision-making procedures in banks or family businesses. Nor do they demonstrate that identifying the source of an emotion is enough to eliminate its influence. A procedure requiring employees to disclose their emotional state to their manager would also introduce a confidentiality issue without a benefit established by these studies.
A practical check in Lugano
As part of SHR’s “Emotional Intelligence” programme, a bank, fashion company, trading firm or Italian-speaking family SME in Lugano could test a short decision form in Italian for a predefined category of purchases. After two weeks of observation, introduce a private pause for two weeks to consider the source of one’s feelings, then record only work-related elements: the criteria used, an alternative option and the reason for the choice. The indicator would be the proportion of decisions documenting, before approval, an alternative and a justification linked to the criteria, calculated across all decisions within the defined scope. This comparison would check for a change in the traceability of reasoning, not demonstrate a reduction in emotional bias or a proven improvement in profitability. To go further: explore the Emotional Intelligence training in Lugano, or browse our executive and employee training programmes in Switzerland.
In pictures: Emotional Intelligence in Lugano
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