Age differences in financial decision making: The benefits of more experience and less negative emotions

The emerging literature on aging and decision making posits that decision‐making competence changes with age, as a result of age differences in various cognitive and noncognitive individual‐differences characteristics. In a national life‐span sample from the United Kingdom (N = 926), we examined age differences in financial decisions, including performance measures of sunk cost and credit card repayment decisions, and self‐report measures of money management and financial decision outcomes. Participants also completed four individual‐differences characteristics that have been proposed as relevant to financial decision making, including two cognitive ones (numeracy and experience‐based knowledge) and two noncognitive ones (negative emotions about financial decisions). First, we examined how age was related to the four financial decision‐making measures and the four individual‐differences characteristics. Older age was correlated to better scores on each of the four financial decision‐making measures, more experience‐based knowledge, less negative emotions about financial decisions, whereas numeracy and motivation were not significantly correlated with age. Second, we found that considering both the two cognitive and the two noncognitive individual‐differences characteristics increased predictions of financial decision making, as compared with considering either alone. Third, we examined how these four individual‐differences characteristics contributed to age differences in financial decision making. Older adults' higher levels of experience‐based knowledge and lower levels of negative emotions seemed to especially benefit their financial decision making. We discuss implications for theories on aging and decision making, as well as for interventions targeting financial decisions.     

The function of concrete emotions in rational decision making

The present study investigates the role of anticipated concrete emotions in preferential decision making. Concrete emotions are conceptualized as a special set of attributes in a multi-attribute utility framework. It is argued that emotions cannot be reduced to patterns of objective attribute values. It is hypothesized that decisions are determined by both concrete emotions and objective attributes. Furthermore, the relative impact of emotions is hypothesized to vary with characteristics of the decision task, namely, the decision domain (persons vs. cities), the similarity of the decision options (similar vs. dissimilar), and the response mode (rating vs. ranking). Four sets of decision options were presented to subjects on a questionnaire. For each option, subjects indicated a preference rating, a ranking of the option within its set, the intensity of four concrete emotions, and the degree to which the option is characterized by four objective attributes. Regression analyses show that including emotions as predictors significantly increases the portion of explained variance of preferences. The relative impact of emotions is moderated by the response mode. Factor analyses yield two independent factors of positive and negative emotions. Surprisingly, only positive emotions are significantly correlated with preferences. We conclude that concrete emotions are a necessary and non-redundant part of the decision process.     

The enduring impact of transient emotions on decision making

People often do not realize they are being influenced by an incidental emotional state. As a result, decisions based on a fleeting incidental emotion can become the basis for future decisions and hence outlive the original cause for the behavior (i.e., the emotion itself). Using a sequence of ultimatum and dictator games, we provide empirical evidence for the enduring impact of transient emotions on economic decision making. Behavioral consistency and false consensus are presented as potential underlying processes.     

Juvenile psychopathy and judicial decision making: an empirical analysis of an ethical dilemma

In the burgeoning juvenile psychopathy literature, there is a debate on whether it is appropriate to apply this construct to youths. Some have suggested that labeling children/adolescents as psychopathic might result in negative consequences, such as being recommended for more restrictive placements. However, the scant evidence is equivocal. This study provides additional insights on this issue by assessing judicial perceptions and recommendations to a hypothetical case. Results indicate that psychopathy influenced perceptions of amenability (eta = .12) and dangerousness (eta = .25), and recommendations for placement (eta = .11). More specifically, youth who were both labeled as psychopathic and ascribed psychopathic traits were viewed as less amenable to treatment and more dangerous and were more likely to be recommended for a restrictive placement than youth who were neither labeled nor described as such. The effect of psychopathy on placement recommendations, however, was not significant after controlling for perceptions of dangerous. This suggests that the influence of psychopathy on judicial restrictiveness may operate through the perceived dangerousness of the youth.     

Guilty,free, and wise: Determinism and psychopathy diminish learning from negative emotions

Emotional experiences can bring about personal growth. For instance, feeling guilty may prompt one to learn from a mistake, and this learning can bring about different and better future behavior. Three studies found that belief in free will facilitated learning from emotional experiences, as inducing participants to disbelieve in free will was associated with reduced learning. Emotional responsiveness, as defined by low psychopathy scores, also facilitated learning from emotional experiences (Studies 2 and 3). The degree of learning associated with emotional experiences was measured by self-rating (Study 1), independent evaluations of lessons learned (Study 2), and whether participants joined a campus recycling program (after being made to feel guilty about an environmental transgression; Study 3).     

Emotion,cognition, and decision making

We examine two explanations of the subliminal affective priming effect. The feelings-as-information model (Schwarz &; Clore, 1988) holds that judgements are based on perceptible feelings. Hence, affective influences depend on the source to which feelings are (mis)attributed. In contrast, the affective primary hypothesis (Zajonc, 1980) suggests that affective influences should resist attributional interventions. This is because the affective system responsible for preferences is separate from the cognitive system responsible for inferences; because early affective processes are automatic and therefore inaccessible to higher-order interventions; and because early affective responses are not represented as conscious feelings. We tested these explanations in two experiments that crossed subliminal affective priming with (mis)attribution manipulations. Both studies found reliable shifts in judgements of neutral stimuli as a result of primes even when subjects were aware that their feelings might not be diagnostic for the judgement at hand. Subjects did not report experiencing any feelings in response to the primes. The obtained affective priming effect was independent of response times and subjective reports of engaging in judgemental corrections. However, the priming effect did prove sensitive to the experimental instructions. We discuss the implications of these findings for the affective primacy hypothesis and the feelings-as-information model.     

Emotions and decision making: Regulatory focus moderates the influence of anticipated emotions on action evaluations

We investigate the moderating effects of self-regulatory foci (Higgins, 1996a) on the impact of anticipated emotions in decision making. We hypothesise that regulatory focus moderates the relationships between anticipated emotions of success and failure of performing an act and evaluations of the act. A promotion focus should highlight the role of dissatisfaction-satisfaction emotions in predicting evaluations, whereas a prevention focus should emphasise the impact of relaxation-agitation emotions. Hypotheses were investigated in two studies. In the first, chronic self-regulatory orientations were assessed; in the second, self-regulatory concerns were manipulated. Results support the moderating effects of regulatory foci on the impact of negative anticipated emotions: Anticipated agitation induces more favourable action evaluations under a prevention focus; and anticipated dejection leads to more favourable action evaluations under a promotion focus. No interaction was detected involving positive emotions, suggesting that an asymmetry may exist in motivational regulation of emotional information.     

Knowledge management in decision making and decision support

A knowledge-oriented view of decisions and decision making is introduced, as a complement to classical perspectives and as a contribution of under-standing computer-based possibilities for relaxing strains on decision makers. This perspective includes a model of knowledge management activities performed by a decision maker and a taxonomy of knowledge types. It leads to a characterization of decision-support-system purpose, traits, and potentials that offers a basis for new research into computer-based possibilities for knowledge management. Clyde W. Holsapple holds the Rosenthal Endowed Chair in Management Information Systems and is Professor of Decision Science and Information Systems at the College of Business and Economics, University of Kentucky.     

Information sampling and group decision making: the effects of an advocacy decision procedure and task experience

Group discussions tend to focus on information that was previously known by all members (shared information) rather than information known by only 1 member (unshared information). If the shared information implies a suboptimal alternative, this sampling bias is associated with inaccurate group decisions. The present study examines the impact of 2 factors on information exchange and decision quality: (a) an advocacy group decision procedure versus unstructured discussion and (b) task experience. Results show that advocacy groups discussed both more shared and unshared information than free-discussion groups. Further, with increasing experience, more unshared information was mentioned in advocacy groups. In contrast, there was no such increase in unstructured discussions. Yet advocacy groups did not significantly improve their decision quality with experience.     

Neural affective decision theory: Choices, brains, and emotions

We present a theory and neurocomputational model of how specific brain operations produce complex decision and preference phenomena, including those explored in prospect theory and decision affect theory. We propose that valuation and decision making are emotional processes, involving interacting brain areas that include two expectation-discrepancy subsystems: a dopamine-encoded system for positive events and a serotonin-encoded system for negative ones. The model provides a rigorous account of loss aversion and the shape of the value function from prospect theory. It also suggests multiple distinct neurological mechanisms by which information framing may affect choices, including ones involving anticipated pleasure. It further offers a neural basis for the interactions among affect, prior expectations and counterfactual comparisons explored in decision affect theory. Along with predicting the effects of particular brain disturbances and damage, the model suggests specific neurological explanations for individual differences observed in choice and valuation behaviors.     

Participation,influence, and satisfaction in group decision making

The hypothesis that attitudinal effects of participation depend on individual differences in motivation was tested in a laboratory experiment with 56 three-man groups (leader and two members). Measures of the attractiveness of power and social acceptance were obtained prior to a group decision task, after which members described their perceived participation, influence, and satisfaction. Results showed that: (a) influence was more strongly related to satisfaction for members with strong, as opposed to weak, power motives; (b) for members with strong affiliation motives, participation was more strongly related to satisfaction than was influence. Relationships varied across satisfaction aspects. It was concluded that participation may be associated with favorable role attitudes through different motive-attainment mechanisms in the group decision-making process.     

Numeracy and decision making

A series of four studies explored how the ability to comprehend and transform probability numbers relates to performance on judgment and decision tasks. On the surface, the tasks in the four studies appear to be widely different; at a conceptual level, however, they all involve processing numbers and the potential to show an influence of affect. Findings were consistent with highly numerate individuals being more likely to retrieve and use appropriate numerical principles, thus making themselves less susceptible to framing effects, compared with less numerate individuals. In addition, the highly numerate tended to draw different (generally stronger or more precise) affective meaning from numbers and numerical comparisons, and their affective responses were more precise. Although generally helpful, this tendency may sometimes lead to worse decisions. The less numerate were influenced more by competing, irrelevant affective considerations. Analyses showed that the effect of numeracy was not due to general intelligence. Numerical ability appears to matter to judgments and decisions in important ways.     

Personality, emotional experience, and efforts to control emotions

Three converging, multimethod studies examined personality and emotional processes. Study 1 (N = 321) examined links among sex, personality, and expectations for emotional events. In Study 2, participants (N = 468) described contents of emotionally evocative slides to a partner (either a friend or a stranger). Participants reported their emotional experience, efforts to control emotion, and the anticipated reactions of their partners. Structural modeling of self-report data and analyses of observational data indicated that Agreeableness and sex were significant predictors of emotional experience and of efforts to control emotion. Study 3 (N = 68) replicated and extended the two previous studies using psychophysiological methods to examine responses to positively and negatively charged emotional materials. Outcomes are discussed in terms of processes underlying the five-factor structural dimension of Agreeableness and links to emotional self-regulation.     

Decision making styles and progress in occupational decision making

This study provides a reexamination of the role of different decisional strategies in facilitating progress in occupational decision making. Although the assumptions that a rational decision making style is the preferred mode of vocational functioning has been endorsed in a variety of career theories and interventions, there has been conflicting evidence about the validity of this assumption. To examine the role of different decisional approaches in the progress of making an occupational decision, the rational, intuitive, and dependent decision making style scores of 71 undergraduate students were used to predict progress in occupational decision making. The results of the regression analyses failed to provide support for the assumption that a rational style is the most effective in accomplishing this careerrelated task, but indicated strong support for the conclusion that the use of dependent decisional strategies is damaging, particularly in early stages of the decisional process.     

Group decision process and incrementalism in organizational decision making

In two studies examining resource allocation, support is found for the notion that group decisions are affected in systematic ways depending on whether or not there was individual consideration of the problem before meeting as a group. Specifically, compared to no prior consideration groups, prior consideration groups (1) escalate their commitment more in progress (i.e., ongoing) decisions, and (2) are less willing to concentrate resources on a single project in adoption (i.e., resource utilization) decisions. The findings challenge the blanket assertion that promoting divergent views in a group decision context is always related to better decisions.     

Consensus, clinical decision making, and unsettled cases

The model of clinical ethics consultation (CEC) defended in the ASBH Core Competencies report has gained significant traction among scholars and healthcare providers. On this model, the aim of CEC is to facilitate deliberative reflection and thereby resolve conflicts and clarify value uncertainty by invoking and pursuing a process of consensus building. It is central to the model that the facilitated consensus falls within a range of allowable options, defined by societal values: prevailing legal requirements, widely endorsed organizational policies, and professional standards of practice and codes of conduct. Moreover, the model stipulates that ethics consultants must refrain from giving substantive recommendations regarding how parties to a moral disagreement in the clinic should evaluate their options. We argue that this model of CEC is incomplete, because it wrongly assumes that what counts as the proper set of allowable options among which the parties are to deliberate will itself always be clearly discernible. We illustrate this problem with a recent case on which one of us consulted-a neonate born with trisomy 18 (T18). We try to show that law, policy, and standards of practice reveal no clear answer to the question posed by the case: namely, whether forgoing gastrostomy tube feedings for a baby with T18 is allowable. We suggest there may be other kinds of cases in which it may simply be unsettled whether a given choice falls within the set of allowable options within which consensus is to be facilitated. What should an ethicist do when confronting such unsettled cases? We agree with the facilitation model that an ethicist should remain neutral among the allowable options, when it is clear what the allowable options are. But, in unsettled cases, the role of a consultant should be expanded to include a process of moral inquiry into what the allowable options should be. We end by raising the issue of whether this means an ethicist should share his or her own conclusions or views about the allowability of a given clinical option.     

Somatic markers,working memory,and decision making

The somatic marker hypothesis formulated by Damasio (e.g., 1994; Damasio, Tranel, & Damasio, 1991) argues that affective reactions ordinarily guide and simplify decision making. Although originally intended to explain decision-making deficits in people with specific frontal lobe damage, the hypothesis also applies to decision-making problems in populations without brain injury. Subsequently, the gambling task was developed by Bechara (Bechara, Damasio, Damasio, & Anderson, 1994) as a diagnostic test of decision-making deficit in neurological populations. More recently, the gambling task has been used to explore implications of the somatic marker hypothesis, as well as to study suboptimal decision making in a variety of domains. We examined relations among gambling task decision making, working memory (WM) load, and somatic markers in a modified version of the gambling task. Increased WM load produced by secondary tasks led to poorer gambling performance. Declines in gambling performance were associated with the absence of the affective reactions that anticipate choice outcomes and guide future decision making. Our experiments provide evidence that WM processes contribute to the development of somatic markers. If WM functioning is taxed, somatic markers may not develop, and decision making may thereby suffer.     

Integrating advice and experience: learning and decision making with social and nonsocial cues

When making decisions, people typically gather information from both social and nonsocial sources, such as advice from others and direct experience. This research adapted a cognitive learning paradigm to examine the process by which people learn what sources of information are credible. When participants relied on advice alone to make decisions, their learning of source reliability proceeded in a manner analogous to traditional cue learning processes and replicated the established learning phenomena. However, when advice and nonsocial cues were encountered together as an established phenomenon, blocking (ignoring redundant information) did not occur. Our results suggest that extant cognitive learning models can accommodate either advice or nonsocial cues in isolation. However, the combination of advice and nonsocial cues (a context more typically encountered in daily life) leads to different patterns of learning, in which mutually supportive information from different types of sources is not regarded as redundant and may be particularly compelling. For these situations, cognitive learning models still constitute a promising explanatory tool but one that must be expanded. As such, these findings have important implications for social psychological theory and for cognitive models of learning.