Examining the Effect of Short-Term Affect on Farmers’ Risk and Time Preferences in Financial Decision-Making

Farmers regularly make intertemporal decisions under risk or uncertainty. To improve how farmers behave when faced with decisions that have financial consequences, there is a need for a deeper understanding of farmers’ risk and time preferences. While the relationship between individual components of affect and risk preferences is well documented, the same cannot be said for holistic measures of affect on one hand, and for affect and time preferences on the other hand. The data analysed in this paper is the 2014–2015 Indonesian Family Life Survey Wave 5. The survey included experimental measures designed to elicit both risk and time preferences from the same subjects. We analysed the data using limited dependent variable regression models. Our findings strengthen what is known about the affect infusion model. With increased pleasant affect, farmers’ willingness to take risks increases significantly. The results also suggest that pleasant affect is associated with increased odds that farmers will choose future rewards in the long horizon but had no statistically significant effect on the short horizon. The practical implications are that an experience of pleasant affect before decision-making may cause the decision-maker (DM) to perceive a prospect as having high benefits and low risks. Pleasant affect may also induce lower sensitivity towards losses and play the role of a buffer which reduces the immediate negative impact of information that otherwise would prevent the DM from focusing on the long-term. JEL Classifications: C93, D81, D91

The provenance and effects of entrepreneurial inspiration

PurposeBuilding on authoritative studies on inspiration in the field of psychology (e.g. Thrash and Elliot, 2013, 2014), this study aims to clarify how entrepreneurial inspiration – an emotional state of personal attraction toward entrepreneurship – is created and how it affects entrepreneurial intentions. First, receptiveness to inspiration is introduced as a potential entrepreneurial feeling trait that constitutes a universal enabler of entrepreneurial inspiration alongside typically idiosyncratic inspirational triggers. Second, this study proposes to reinforce the theoretical base of the relation between entrepreneurial inspiration and entrepreneurial intentions by applying the affect infusion model (AIM) and empirically testing its explanatory power.Design/methodology/approachHypotheses are tested through independent and dependent sample t-tests and hierarchical regression analyses with an interaction effect. Data originate from a pre-post course survey among 342 entrepreneurship students from various countries and institutions.FindingsThe results confirm a positive relation between receptiveness to inspiration and entrepreneurial inspiration. Receptiveness to inspiration precedes and increases with entrepreneurial experience, suggesting that it can be both inborn and cultivated. In line with the AIM, entrepreneurial inspiration stimulates only the entrepreneurial aspirations of participants without entrepreneurial experience. Experienced individuals, on the other hand, derived more entrepreneurial inspiration from their courses, but this was not translated to higher entrepreneurial intentions. Instead, they could benefit from this inspiration in other ways proposed in the literature, such as enhanced opportunity recognition.Originality/valueThis study provides much needed, theory-informed, insight into the formation of entrepreneurial inspiration. Furthermore, it is the first research to propose and test a specific theoretical underpinning of the relation between entrepreneurial inspiration and entrepreneurial intentions, which also accounts for the moderating role of entrepreneurial experience. Finally, the rare multi-country, multi-institution nature of the sample reinforces the external validity of the findings.

The Impact of Sentiment on Commodity Return and Volatility

This study empirically investigates the effect of investor sentiment on returns and volatility of eight commodities. The findings suggest that sentiment has a predictive power on these commodities’ return and volatility. Fundamentally, return and volatility are positively associated with sentiment, suggesting that investors in the commodity markets are irrational — entailing the existence of noise trading. The results confirm the prediction of the affect infusion model in which optimistic investors are willing to take more risks, thus, raising returns and volatility. Furthermore, sentiment has a significant asymmetrical impact on volatility, and negative sentiment has a significantly greater impact than positive sentiment.

Entrepreneurial Affect and Emotions in Entrepreneurship Education Impact Research: A Systematic Review and Research Agenda

In this research article, we systematically review literature on entrepreneurial affect and emotions in entrepreneurship education (EE) impact studies. In view of the increasing usage of entrepreneurial affect in the EE literature and the multiplicity of its facets, the main aim of this article is to create a definitional framework of affect. Based on the criteria of scientific standard and relevance for EE, we critically select 46 literature sources published from 1984 to 2017 and conduct a citation analysis of their impact. We then systemize and classify these sources using co-citation analyses as well as conduct a critical review of content similarities. As a result, we identify five main groups of the literature sources: (a) Affect in entrepreneurship research, (b) Affect in EE impact research, (c) Affect-cognition relationship, (d) Affect-conation relationship, and (e) Conceptual contributions. Our critical review of the literature sources further leads to the creation of the definitional framework of affect. The framework facilitates deeper understanding of affect and advocates terminological precision. It may, therefore, serve other EE researchers in conducting impact studies. In this vein, we formulate propositions for further research by combining the affect infusion model with the theory of planned behavior.

THE INTERACTION OF INTUITION AND RATIONALITY DURING ESCALATED NPD DECISIONS: AN INVESTIGATION OF DECISION-MAKERS’ AFFECTIVE STATES

Decision-makers often struggle to terminate unsuccessful new product development (NPD) projects, so that escalating commitment occurs. Although research shows that rational and intuitive decision-making styles (DMS) as well as a decision-maker’s affective state determines the performance of NPD decisions, little is known about their influences on escalating commitment. By applying the affect infusion model in an experimental study, we investigate how a decision-maker’s affective state influence their escalating commitment by focusing on their use of a rational and an intuitive DMS. Our findings, based on 366 respondents, show that a rational DMS is unable to reduce commitment escalation. Surprisingly, an intuitive DMS is able to reduce a decision-maker’s commitment in the case of a positive affect, whereas a rational DMS increases their commitment in the case of a negative affect. Thus, our interdisciplinary research on affect and decision-making extends and contributes to research into decision-making during the NPD process as well as into escalating commitment.

Negative Affective Language in Politics

How do the words we use to talk about politics influence political attitudes and evaluations? I focus specifically on negative affective language—words which individuals have preexisting negative reactions toward. Considering the Affect Infusion Model (AIM), processing style influences how individuals use affect when making decisions. The impact of affective language depends upon the complexity of the decision. In simpler processing tasks, individuals will use affect as a heuristic. This causes a misattribution of generalized negative affect onto a political target, leading to harsher evaluations. When a decision is complex, affective language influences how new information is stored in memory, along with improving information recall and abstract thinking. For those who are exposed to negative affective language, negative evaluations of politicians persist more strongly in memory, while these evaluations fade away when affect is used as a heuristic.

Occurrence of rating distortions and ratees’ fairness perceptions per raters’ mood and affect

Purpose The purpose of this paper is to investigate the occurrence of rating distortions under raters’ different mood conditions and at different levels of interpersonal affect of raters towards ratees, and further its association with ratees’ perceptions of distributive and interpersonal fairness. Design/methodology/approach For the scenario-based experiment, the study recruited 110 undergraduate students as participants. Of them, 22 raters appraised the video-taped buyer-seller negotiation performance of 88 ratees. Repeated measures analysis was employed to analyse data. Findings Results revealed that under different mood conditions (pleasant and sad) and at different levels of interpersonal affect towards ratees (high and low), raters distorted ratings (inflated and deflated, respectively). These rating distortions shaped ratees fairness perceptions in such a way that ratees who received inflated ratings due to raters’ pleasant mood and high interpersonal affect perceived more distributive and interpersonal fairness than ratees who received deflated ratings due to raters’ sad mood and low interpersonal affect. Originality/value The paper is a step towards integrating the affect infusion model with distributive and interpersonal fairness theory. This integration can be of value for enhancing our understanding of how rater-centric rating errors take place, which subsequently shape ratees’ fairness perceptions.

The impact of affect on organizational justice perceptions: A test of the affect infusion model

How individuals form justice perceptions has been a fundamental question for organizational justice research. While most researchers have treated justice perceptions as a result of deliberate cognitive processes, a limited number of studies have examined the role of affect in forming justice perceptions. Using the affect infusion model, we investigate the predictive role of affect in forming justice perceptions and consider two moderating contextual factors: personal relevance and group context. Two experimental studies, with a student sample and an employee sample, were conducted. Results confirm that participants in positive affective states perceived higher distributive and procedural justice than those in negative affective states. Moreover, personal relevance moderates the relationships between affect and both distributive and procedural justice perceptions, and the relationship is enhanced as the level of personal relevance increases. The results also suggest that group context constrains the influence of an individual participant’s affect on procedural justice.

Employees’ emotions in change: advancing the sensemaking approach

Purpose Organizational changes are emotionally charged processes, and scholarly research has increasingly emphasized the impact of employee emotions on successful change management. This impact has rarely been considered in light of approaches focussing on employee sensemaking. To address this critical gap, the purpose of this paper is to combine the model of enacted sensemaking with insights from the Affect Infusion Model. Design/methodology/approach To test the model, the authors surveyed 261 employees with a vignette study and performed structural equation modeling on the results. Findings The findings reveal that emotions significantly affect employees’ level of psychological resources, particularly change commitment, efficacy, and expectations. Furthermore, change commitment and efficacy are significant predictors of resistance intention, which confirms (to an extent) the validity of enacted sensemaking, and these factors mediate the relationship between employees’ emotions and their resistance intentions. Research limitations/implications This study focussed on the early stages of a change initiative. Therefore, the authors only considered employee assessment at one point in time. Practical implications This model has managerial utility for explaining how employees’ resistance intention regarding change is influenced by employees’ emotions and their psychological resources. Originality/value The results broaden the horizons because they suggest a model of “emotionally primed” enacted sensemaking for employees during organizational change by offering a new theoretical framework (enacted sensemaking and substantive processing) and a new methodological approach (quantitative vignette study).