For decades, classical economics used mathematical models to explain market theory. Psychology was trumped by an empirical approach. Now economists are returning to the view that human behaviour does influence the market because emotions directly impact on the perception of risk.
Human judgment and decision-making is a little like an iceberg — a lot of it lies far below the surface. Harvard Kennedy School Professor Jennifer Lerner, who directs the new Laboratory for Decision Science, draws upon psychology, economics, and neuroscience to better understand the social and emotional influences on judgment and decision making that tend to escape our conscious awareness. Her latest research paper, “Misery is not miserly: Sad and self-focused individuals spend more,” is scheduled for publication in Psychological Science.
When you’re depressed, you tend to devalue things around you. But then why are you more inclined to hit the mall and buy stuff at higher prices than you would at other times? A new paper to be published in Psychological Science provides an answer to that question — and support for a theory of the self proposed by William James more than a century ago.