Rational Actors or Rational Fools? Implications of the Affect Heuristic for Behavioral Economics

Authors: Paul Slovic, Decision Research; Melissa L. Finucane, Center for Health Research, Hawaii; Ellen Peters, Decision Research; Donald G. MacGregor, Decision Research

Publication: American Institute for Economic Research (symposium paper)

Year: 2002

Focus Area: Decision Making, Prevention, Emotion

Relevance: This article presents a readable and comprehensive review of the affect heuristic – the tendency to rely upon positive or negative emotions to guide decision making – with many experimental examples. The section on judging risk may be especially useful in the fraud prevention field, as people tend to assume that low risk situations have high benefits, and vice versa.

Summary: “Using an overall, readily available affective impression can be far easier — more efficient — than weighing the pros and cons or retrieving from memory many relevant examples, especially when the required judgment or decision is complex or mental resources are limited.”

  • In most cases, people perceive high risk situations as having low potential benefit, and low risk situations as having high potential benefit. When time is limited, this relationship becomes even stronger.
  • Well-known and dreaded hazards (i.e. cancer) are seen as riskier than less dreaded hazards (i.e. accidents).

Author Abstract: This paper introduces a theoretical framework that describes the importance of affect in guiding judgments and decisions. As used here, “affect” means the specific quality of “goodness” or “badness” (i) experienced as a feeling state (with or without consciousness) and (ii) demarcating a positive or negative quality of a stimulus. Affective responses occur rapidly and automatically — note how quickly you sense the feelings associated with the stimulus word “treasure” or the word “hate.” We shall argue that reliance on such feelings can be characterized as “the affect heuristic.” We will trace the development of the affect heuristic across a variety of research paths and discuss some of the important practical implications resulting from ways that this heuristic impacts our daily lives.

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