Constructing Confidence: The Role of Affect and Cognition in Decisions Under Radical Uncertainty
Year: 2020
Type: preprint
Abstract: Confidence in one’s decisions is key in making satisfactory decisions, especially under radical uncertainty where no normatively correct choice can be made. Low confidence can result in monetary losses for individuals (e.g. overtrading in the financial markets) or retailers (e.g. processing consumer returns). But how do people construct confidence in their decisions? Using Conviction Narrative Theory (CNT) as a framework, we ran two studies demonstrating the relationship between integral emotions, cognition and confidence. Consistent with CNT, we found that even in contexts which are not explicitly affective, such as financial investments, weak and strong arguments for a stock to rise are still interpreted affectively. Approach emotions (e.g. excitement) generate more confidence and make individuals perceive such arguments as stronger. Conversely, avoidance emotions (e.g. anxiety) reduce both confidence and perceived argument strength. Overall, cognition, operationalised as perceived argument strength, mediates the effects of emotion on confidence. This approach to decision-making is all the more rational under radical uncertainty, where there is no normatively correct answer based only on facts.
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3162587301