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How Emotions Shape Your Decision Making

Emotions and mood have a huge influence on decision making. How we feel affects the solutions we opt for and the outcomes we achieve. Economists have found a positive correlation between the amount of sunshine on a given day and stock market performance across 26 countries (Kamstra et al. 2003). Research also found that stock market returns declined when a country’s football team was knocked out of the World Cup (Edmans et al. 2007).

Emotions and mood often shape the lens through which we interpret situations and therefore guide the choices we make. Research found that people experiencing fearful emotions will be pessimistic about future events and will be more risk averse, whereas someone experiencing anger perceives greater certainty about the future and will take bigger risks.

The good news is that if we become aware of our emotional state then we can start to manage our emotions and reduce their influence. Research found that people with high emotional intelligence can identify which events caused their emotions and screen out their impact.

So next time you’re making an important decision, take a few moments to breathe and reflect on your mood and your emotional state. Just naming your emotion can create enough awareness so that you choose a different path. Give yourself some time to reduce its influence. Alternatively, ask for feedback from people around you that you trust and ask what they’re noticing about you.

What strategies do you have for managing your emotions when making an important decision?

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