Person:

Lerner, Jennifer

When making decisions, people sometimes deviate from normative standards. While such deviations may appear to be alarmingly common, examining individual differences may reveal a more nuanced picture. Specifically, the personality factor of need for cognition (i.e., the extent to which people engage in and enjoy effortful cognitive activities; Cacioppo & Petty, 1982) may moderate decision makers’ susceptibility to bias, as could personality factors associated with being a leader. As part of a large-scale assessment of high-level leaders, participants completed a battery of decision-making competence and personality scales. Leaders who scored higher on need for cognition performed better on two of four components of a decision-making competence measure: framing and honoring sunk costs. In addition, the leader sample performed better than published controls. Thus, both individual differences in need for cognition and leadership experience moderate susceptibility to decision biases. Implications for broader theories of individual differences and bias are discussed.

Misery is not miserly: sadness increases the amount of money decision makers give up to acquire a commodity (Lerner, Small, & Loewenstein, 2004). The present research investigated when and why the “misery-is-not-miserly” effect occurs. Drawing on William James’s (1890) concept of the material self, we tested a model specifying relationships among sadness, self-focus, and the amount of money decision makers spend. Consistent with our Jamesian hypothesis, results revealed that self-focus both moderates and mediates the effect of sadness on spending. Results were consistent across males and females. Because the study used real commodities and real money, results hold implications for everyday decisions. They also hold implications for theoretical development. Economic theories of spending may benefit from incorporating psychological theories – specifically theories of emotion and the self.

This paper hypothesizes a phenomenon—myopic misery—in which sadness creates a myopic focus on obtaining money now versus later, increasing intertemporal discount rates and thereby producing substantial financial costs. Experiments 1-3 randomly assigned participants to a sad- or neutral-mood condition, and then offered intertemporal choices. Disgust served as a comparison condition in Experiments 1-2. Results revealed that sadness significantly increased impatience: Relative to median neutral-mood participants, median sad-mood participants accepted 13% to 34% less money today to avoid waiting three months for payment. Impatient thoughts mediated the effects. Disgusted participants were not more impatient than neutral participants, implying that the financial effects do not arise from all negative emotions. The paper concludes that myopic misery is a robust and potentially harmful phenomenon.