Emotion Regulation and Economic Decision-Making

Abstract

Emotion plays an important role in human social and economic decision-making. Only in the last few decades has this view been accepted in mainstream research by economists and psychologists studying decisional processes. Many studies now provide compelling evidence that the experience of various different emotions influence changes in decisional outcomes. Emerging research on emotion regulation, however, highlights that humans typically make efforts to control emotion experiences. This leaves open the possibility that decision effects attributed to acute emotions may be affected by regulatory strategies. If so, this raises the additional possibility that different regulation strategies could have different implications for economic decisions. Researchers have recently begun to study these possibilities and discovered that emotion regulation can indeed modulate effects that task-related and incidental emotions have on decisions. In this chapter, we provide a review of the empirical studies that have investigated the effects of regulatory strategies on social and economic decisions. We present an overview of the concept of emotion regulation by referring to the different types of regulatory strategies and their cognitive and behavioral effects. We proceed to review empirical studies relevant for various types of decision-making, such as risk and ambiguity, susceptibility to framing, and economic bargaining. We conclude by discussing practical implications of this rapidly evolving research topic. (PsycINFO Database Record (c) 2016 APA, all rights reserved)