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Dr. Bob is Robert Hsiung, MD,
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Posted by badhaircut on March 29, 2004, at 7:34:53
Excerpts from news report on sadness & money decisions by Sharon Begley in The Wall Street Journal (March _?_, 2004):
If you are looking to unload an asset, be it a car or an eBay gewgaw, try to find buyers who are feeling sad, and stay away from those who are feeling disgusted, happy or even neutral. If, on the other hand, you are looking to buy, seek out sellers who are sad or disgusted, but again steer clear of anyone too jovial.
...Last year, researchers found that anger makes people assess situations more optimistically, downplaying risks and overestimating potential benefits. ... Fear does the opposite, making us exaggerate risks and minimize befits.
To see how two negative emotions, disgust and sadness, affect economic decision making, Jennifer Lerner of Carnegie Mellon University and her colleagues recruited 199 volunteers. Some watched a scene from "The Champ," in which a boy's father dies. Others watched the infamous filthy-toilet clip from the Gen-X hit "Trainspotting." A third group watched an emotionally neutral clip of coral reef fish. All wrote down how they felt afterward.
[They then engaged in a little market involving pens.]
Disgust cut people's selling prices [to about half the price demanded by the emotionally neutral fish-watchers], as the "yuck" factor made them eager to get rid of the pens. Disgust also reduced buying prices. Reluctant to take on anything new, the volunteers would do so only at a rock-bottom price.
Sadness, too, cut people's selling price. Feeling blue made people so desperate for change that they held a fire sale. Sadness also raised the price people would pay for the pens.
Economists tend to think consumers open their wallets despite downbeat news. Instead, tragic headlines might prompt spending.
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Lerner's research report is coming this spring in the journal "Psychological Science." The WSJ is only available to subscribers (no links).
This is the end of the thread.
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