While profit and loss can be measured easily enough, the emotional responses that determine whether results feel like success or failure are much more complicated. INSEAD’s Associate Professor of Decision Sciences, Philippe Delquié and Alessandra Cillo argue this response is not a factor of prior expectations, as suggested by previous studies. Instead, outcomes are valued relative to all missed outcomes, whether these alternatives were foreseen or not. This paper has profound implications for behavioural finance, while offering insight into factors surrounding major investment and business decisions.
Authors: Alessandra CILLO, Philippe Delquié
Source: INSEAD Knowledge
Subjects: Finance, Organizational Behavior