Emotional Ambivalence Leads to Accuracy
Study by Ross professors shows feeling two conflicting emotions is the optimal state of mind for predictions and forecasts.
ANN ARBOR, Mich. — Think that emotions have no place in business? Think again. New research by professors and a PhD student at the University of Michigan's Ross School of Business shows the most accurate forecasts and judgments come from those who simultaneously experience both positive and negative emotions.
A series of studies by Professor Jeffrey Sanchez-Burks, PhD student Laura Rees, Professor Reuven Lehavy, and Naomi B. Rothman of Lehigh University examined how people performed when feeling positive, negative, and when feeling both emotions. Their work is outlined in an article, "The Ambivalent Mind Can Be a Wise Mind: Emotional Ambivalence Increases Judgment Accuracy," published in the Journal of Experimental Social Psychology.
For decades, economists, behavioral scientists, and business leaders have considered an emotional decision maker an unwise one. Elated investors inflate the market with irrational exuberance, while grumpy sales forecasters create product shortages by being overly pessimistic.
The consensus has been that the ideal is an emotionless state of mind.
But the new research shows that people who feel both positive and negative emotions — a state known as emotional ambivalence — produce more accurate forecasts and predictions than people who feel strongly good or bad. That's because people are more likely to accept diverse perspectives when emotionally ambivalent than when feeling one dominant emotion.
"We found that emotions can indeed narrow people's thinking, particularly when people are experiencing either a positive or negative emotion," said Sanchez-Burks, Michael R. and Mary Kay Hallman Fellow and associate professor of management and organizations. "However, we found that when people are put into a state of mind where they feel two conflicting emotions, they become more receptive to more diverse pieces of information. This broadened perspective enables them to form more accurate forecasts and make more informative decisions."
Says Rees: "People who have mixed emotions often get the short end of the stick in the workplace. It's often seen as incompetence. But we find it can be very valuable."
The idea for the study came from previous work on the wisdom of crowds. Some studies have shown that crowdsourced forecasts tend to be accurate because they take in more perspectives than an individual would. A high number of participants tends to cancel out any biases.
A series of experiments induced emotional states in people — either through writing about a life experience or watching movie scenes — and recorded their accuracy in making predictions and forecasts.
The people induced into a state of emotional ambivalence consistently outperformed the other groups in the forecasting tasks.
The results have practical implications for people leading organizations.
"Leaders struggle with how to get their teams to make more accurate forecasts and judgments," Sanchez-Burks said. "Sometimes, a leader will give the team a pep talk. Others try to scare people into taking it seriously. Our research suggests leaders may be better off not messing with people's emotions. Both the approaches I mentioned homogenize a group's emotions. If you allow a natural diversity of moods, you'll likely get more accurate information."
Accurate forecasts are a critical part of accounting, which is why Lehavy, chair of accounting and the Victor L. Bernard PriceWaterhouse Coopers LLP Collegiate Professor of Accounting, also worked on the study.
"I was intrigued by this project because of the possibility that it would allow me to understand how certain aspects from social psychology might influence the accuracy of financial and other forecasts," he said. "The bulk of my research and teaching focuses on the ability of capital market participants — investors, analysts, and managers — to formulate accurate predictions of future financial outcomes such as earnings and stock prices."
The research also bucks the common wisdom of trying to remove emotions from the equation at work. Rees and Sanchez-Burks say their research shows it's more productive to acknowledge the role emotions play in decision making.
"Emotions exist. It's more harmful for the organization to try to pretend they don't," Rees says.
— Terry Kosdrosky
For more information, contact:
Terry Kosdrosky, (734) 936-2502, firstname.lastname@example.org