Adaptive rationality in strategic interaction: do emotions regulate thinking about others?

Show simple item record Ehrig, Timo Manjaly, Jaison Singh, Aditya Sunder, Shyam
dc.contributor.other Cowles Foundation for Research in Economics
dc.coverage.spatial Yale University 2020-04-27T05:22:48Z 2020-04-27T05:22:48Z 2020-04
dc.identifier.citation Ehrig, Timo; Manjaly, Jaison; Singh, Aditya and Sunder, Shyam, "Adaptive rationality in strategic interaction: do emotions regulate thinking about others?", Cowles Foundation Discussion Paper, Cowles Foundation for Research in Economics, Yale University, US, no. 2227, Apr. 2020. en_US
dc.description.abstract Forming beliefs or expectations about others� behavior is fundamental to strategy, as it co-determines the outcomes of interactions in and across organizations. In the game theoretic conception of rationality, agents reason iteratively about each other to form expectations about behavior. According to prior scholarship, actual strategists fall short of this ideal, and attempts to understand the underlying cognitive processes of forming expectations about others are in their infancy. We propose that emotions help regulate iterative reasoning, that is, their tendency to not only reflect on what others think, but also on what others think about their thinking. Drawing on a controlled experiment, we find that a negative emotion (fear) deepens the tendency to engage in iterative reasoning, compared to a positive emotion (amusement). Moreover, neutral emotions yield even deeper levels of reasoning. We tentatively interpret these early findings and speculate about the broader link of emotions and expectations in the context of strategic management. Extending the view of emotional regulation as a capability, emotions may be building blocks of rational heuristics for strategic interaction and enable interactive decision-making when strategists have little experience with the environment.
dc.description.statementofresponsibility by Timo Ehrig, Jaison Manjaly, Aditya Singh and Shyam Sunder
dc.language.iso en_US en_US
dc.title Adaptive rationality in strategic interaction: do emotions regulate thinking about others? en_US
dc.type Working Paper en_US

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