An Empirical Research On The Influence Of Affect Heuristic On Risk Decision Making

Affect heuristic is a shortcut that people apply in their decision making. Objects and events are linked with images that are associated with positive or nagetive affect in people's brain, during the decision making, the link is activated automatically. In order to save cognitive resources, people are apt to make decision relying on the good/bad feelings, positive affect is linked with risk seeking, and negative affect is linked with risk aversion. This research explored the influence of affect heuristic on risk decision making by using experimental method and survey method. There were two parts in the research, the first part was an experimental research, time pressure paradigm and affect inducement paradigm were used respectively to find out the influence of affect heuristic on risk decision making with gain and loss framing. The second part used the data of the investors' real decision making in China's stock market to discuss the influence of affect heuristc on investors'risk decision making. The results are as following:1. In the time pressure condition, affect heuristic and decision frame had interaction when making decision, the sum of people that chose risky option in the gain framing condition was increased, and the people chose certainty option in the loss framing condition was increased. The framing effect was weakened.2. When emotional picture was used to induce the affect, affect heuristic and decision frame had interaction when making decision, more people chose the risky option in both gain and loss framing conditions by using the positive picture to induce positive affect, and more people chose the certainty option in both framing conditions by using the negative picture to induce negative affect.3. Affect heuristic was a prevalent factor in China's stock market. No matter the frequency distribution of the maximum price fluctuation or the price fluctuation itself, there was significant difference between the pressure time and non-pressure time.4. There were different influences of affect heuristic on bull and bear market. In the bull market, the influence of affect heuristic on risk decision making was significant; in bear market, the influence was not significant.