One practical application of these insights (for both investors and managers) is to ask yourself which of the following emotional states you are operating out of – A) I “want more” (roughly equivalent to aroused or even “greedy” OR B) I “want less” (roughly equivalent to cautious and the spectrum of uncertainty/doubt/anxious/fear). Using these two basic categories allows you to systematically integrate “emotion analytics” into your current processes.

Neuroeconomics research is delivering loads of data showing how our feeling states influence not only our decisions but our interpretation of data just as Taffler notes. (See Kuhnen and Knutson 2008 on Kuhnen Northwestern.edu website, Paper on Beliefs and “Affect”). In other words, as humans, we tend to see confirmation and not dissent in new data. Shiller mentioned this in yesterday’s NY Times Economic view column.

So in the tradition of psychoanalytic theory, it pays to put effort into becoming conscious of what one may be feeling and the simple more/less dichotomy above is an excellent starting point. That strategy yields three distinct benefits – #1 Realization of subtle bias #2) Direction on new avenues of focus #3) Higher levels of confidence in our analysis and our decisions.