ABSTRACT
Understanding the interaction between reason and passion in economic be-havior has aroused great interest over the ages, and it prompted Jevons (1871/1965), not known to be a feeble mind, to emphasize that “it is from the quantitative effects of the feelings that we must estimate their comparative effects” (p. 11) on economic and other behavior of relevance. Clearly, making a choice—about a production plant's location, investment opportunity, car, business partner, spouse, or career—is not a purely cold, calculated cognitive endeavor. On the contrary, these decisions are often fueled by hot emotion. After a long period in which the calls by Jevons and others appear to have been ignored, and attention in theory and research mostly focused on cognitive, deliberative processes, researchers across disciplines have started to look at affective and emotional factors to understand and explain the behavior of economic agents (for reviews, see Elster, 1998; Kahneman, 2003; Loewenstein, 2000). One can now safely say that economic, social, and decision theory recognizes that emotion is a force to be reckoned with.
