University of Toronto, Rotman School of Management
Toronto – The anxiety people feel making investment decisions may have more to do with the traffic they dealt with earlier than the potential consequences they face with the investment, but not if the decision-maker has high emotional intelligence a recent study published in Psychological Science suggests.
The study shows that understanding the source and relevance of emotions influences how much sway they have over individuals' decision-making and can affect the willingness to take risks.
"People often make decisions that are influenced by emotions that have nothing to do with the decisions they are making," says Stéphane Côté, a professor at the University of Toronto's Rotman School of Management, who co-wrote the study with lead researcher Jeremy Yip of the Wharton School of the University of Pennsylvania. "Research has found that we fall prey to this all the time.
"People are driving and it's frustrating," says Prof. Côté. "They get to work and the emotions they felt in their car influences what they do in their offices. Or they invest money based on emotions that stem from things unrelated to their investments. But our investigation reveals that if they have emotional intelligence, they are protected from these biases."
The study's first experiment showed that participants with lower levels of emotional understanding allowed anxiety unrelated to decisions they were making concerning risk influence these decisions. Those with higher emotional intelligence did not.
The entire press release is here.