33. Emotions

. Important emotions - these include disappointment (anticipation), regret (the experience of an outcome depends on an option that you could have adopted but did not). These emotions are real and are involved in decision-making.

. "Emotion of the moment" is an important consideration in buying and selling. Selling goods that one would normally use activate regions of the brain that are associated with displeasure and pain. Buying also activates these areas and only when the prices are perceived to be too high; the brain also perceives buying at especially low prices a pleasurable event.

. The effect of price increases (losses relative to the reference point) is about twice as large as the effect of gains

Emotional response to gains/losses with high and low probabilities linked with gambling

organisational development change management


. Choices are said to be risk averse if the sure thing is preferred, and risk seeking if the gamble is preferred

. The number 2 quadrant is where people who face bad options take desperate gambles to reduce the chance of experiencing a large loss. Risk-taking of this kind often turns manageable failures into disasters. The thought of accepting large sure losses is too painful and a hope of complete relief is too enticing to make the sensible decision to cut one's losses. For example, a firm losing business to superior technology can waste their remaining assets in a futile attempt to bridge the gap


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