Avoiding negative vs. achieving positive outcomes in hard and prosperous economic times

Kobe Millet, Lien Lamey and Bram Van den Bergh

Organizational Behavior and Human Decision Processes, 2012, vol. 117, issue 2, 275-284

Abstract: Three studies suggest that business cycle fluctuations trigger distinct motivational orientations that selectively affect economic judgment and decision making. Economic contractions induce avoidance motivation and affect negative economic sentiment, but leave approach motivation and positive economic sentiment unaffected. In contrast, economic expansions induce approach motivation and positive economic sentiment, but do not affect avoidance motivation or negative economic sentiment (study 1). Moreover, economic contractions induce risk aversion for negative outcomes, but not for positive outcomes, while economic expansions instigate risk seeking for positive outcomes, but not for negative outcomes (study 2). A time-series study based on consumer spending over eight decades mirrors the findings of the experimental studies: The consumption of products associated with avoiding negative outcomes increases during economic contractions, but not during expansions. In contrast, the consumption of products associated with achieving positive outcomes increases in expansions, but is unaffected by contractions (study 3).

Keywords: Business cycle; Gains; Losses; Approach; Avoidance; Motivations; Risk; Consumption (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jobhdp:v:117:y:2012:i:2:p:275-284

DOI: 10.1016/j.obhdp.2011.11.008

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