Psychology, Financial Decision Making, and Financial Crises

Journal of Risk and Uncertainty, 5(4), 297-323

At the heart of emotion, mood, and any other emotionally charged event are states experienced as simply feeling good or bad, energized or enervated. These states--called core affect--influence reflexes, perception, cognition, and behavior and are influenced by many causes internal and external, but people have no direct access to these causal connections. Core affect can therefore be experienced as free-floating (mood) or can be attributed to some cause (and thereby begin an emotional episode). These basic processes spawn a broad framework that includes perception of the core-affect-altering properties of stimuli, motives, empathy, emotional meta-experience, and affect versus emotion regulation; it accounts for prototypical emotional episodes, such as fear and anger, as core affect attributed to something plus various nonemotional processes.