It shouldn’t be a surprise that emotions have an impact on our decision-making.
In one study (http://www.pbs.org/wgbh/nova/body/emotions-decisions.html), Jennifer Lerner found that sadness has the effect of making us pay more and making us more willing to forgo future money for present satisfaction. Anger makes us more willing to take risks.
I’ve always thought that thinking of people in general as irrational hints of condescension. In my experience, people make decisions that make sense for them, at the time they are making those decisions, taking into account their emotional state. Their decisions are suprarational, not irrational.
But what does it mean if people are suprarational? To me, this suggests that we need to explore factors that go beyond the traditionally rational if we are to understand how people make decisions.
I’m particularly interested in the concept of insecurity. Everyone is subject to some degree of insecurity. Some of this insecurity is intrinsic (e.g. individual emotional-state volatility), some is extrinsic (e.g. macroeconomic fluctuations resulting in job stress).
If people are insecure, they will make more decisions that are optimized for short rather than long time horizons. They will also make decisions to manage their current emotional state, which has a very short time horizon, rather than their long-term happiness. Think of the kinds of decisions people make in the context of romantic relationships, and you’ll understand why we should avoid making decisions when we are feeling insecure.
Can we avoid insecurity then? Not altogether, though we can manage to some extent the intrinsic factors, i.e. volatility of our emotional states. But we can and should avoid making decisions with long-term impact when we feel insecure.
Unbelievably hard to do though at a point when our decision-making function is not optimized for the long term. A chicken-and-egg problem.