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Thinking, feeling and deciding: the influence of emotions on the decision making and performance of traders

Fenton-O'Creevy, Mark; Soane, Emma; Nicholson, Nigel and Willman, Paul (2011). Thinking, feeling and deciding: the influence of emotions on the decision making and performance of traders. Journal of Organizational Behavior, 32(8) pp. 1044–1061.

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DOI (Digital Object Identifier) Link: http://dx.doi.org/10.1002/job.720
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Abstract

We report on a qualitative investigation of the influence of emotions on the decision-making of traders in four City of London investment banks, a setting where work has been predominantly theorized as dominated by rational analysis. We conclude that emotions and their regulation play a central role in traders' decision-making. We find differences between high and low performing traders in how they engage with their intuitions, and that different strategies for emotion regulation have material consequences for trader behavior and performance. Traders deploying antecedent-focused emotional regulation strategies achieve a performance advantage over those employing primarily response-focused strategies. We argue that, in particular, response-focused approaches incur a performance penalty, in part because of the reduced opportunity to combine analysis with the use of affective cues in making intuitive judgments. We discuss the implications for our understanding of emotion and decision making, and for traders' practice.

Item Type: Journal Article
Copyright Holders: 2010 Wiley & Sons, Ltd.
ISSN: 0894-3796
Project Funding Details:
Funded Project NameProject IDFunding Body
Not SetL211252056ESRC (Economic and Social Research Council)
Not SetNot SetEuropean Commission 7th Framework Programme [grant number 231830]
Keywords: traders; emotion; emotion regulation; intuition; financial decision-making; performance
Academic Unit/Department: Open University Business School
Item ID: 31984
Depositing User: Mark Fenton-O'Creevy
Date Deposited: 24 Jan 2012 10:38
Last Modified: 20 Mar 2014 16:01
URI: http://oro.open.ac.uk/id/eprint/31984
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