How do people make decisions? On emotions.

“Decisions are always colored by emotions” — an excerpt from Alberto Ferreira’s talk at UXPA International 2017. Is this true?

We like to think of ourselves as rational beings. We read most of the Amazon reviews before buying, and we don’t trust ads before completing our own research. Really, how controlled by emotions could we be with so much unbiased data at our fingertips and a healthy dose of cynicism in marketing?


Across industries, research continues to support Alberto’s deduction that decisions are at least colored by, and sometimes dependent on, an emotional experience. This is true in day-to-day decisions like rebalancing an investment portfolio, all the way up to large-scale decisions like buying a home or signing an apartment lease.

Investing as an Emotional Journey

Here’s an example that you might expect to live and breath through numbers and data, but is actually driven by emotions: Investing. The traditional investment model assumes that people make rational, unbiased decisions and consider all available information. But we’re humans — and that’s never the case.

Combining psychology and finance is much older than the 2008 recession, but the worldwide market’s emotional response to events in the 2000’s gave the theory of behavioral finance a foothold. Behavioral finance considers how people actually behave, how we are influenced, and how we are biased. “We use our emotions as “shortcuts” to trim time from analysis and to make ourselves more comfortable — a process that has major pitfalls. Our individual “intrapsychic systems” — our patterns of thoughts and beliefs based on life experiences, current moods, personal affects and biases — are filters that profoundly alter the outcomes of our decisions.” Basically, where computers can analyze disparate data points and find relationships between them, our brains trim some of the GBs of available data and insert a few MBs of emotion and memory. This is good for saving time — bad for unbiased decisions, though.

“When the media raves about the latest “hot” investment or highlights “dramatic” declines in the market, some investors are tempted to chase the winners and sell the losers. This type of emotional response could be a recipe for underperformance because it results in buying high and selling low — not the recipe for a successful investment strategy.”

And this kind of emotional decision-making extends beyond stock performance, all the way to the beginning of the process of choosing a financial institution to invest with. For example, Betterment — a company that offers robo-advising services — saw users’ uneasiness in investing with a computer instead of a traditional human advisor. To combat these fears, the company establishes a personal relationship in the signup process by having the user interact with a “person” and using conversational copy. Source Source Source Source

The Impact of Emotions in Buying a House

I recently interviewed credit union executives who know that the mortgage process, which should be driven by numbers like interest rate, monthly payments, and points, is often actually fraught with emotional decision-making. “We can tell someone they’re pre-qualified with us for a good mortgage rate, but then they spend months talking to their realtor and establishing a relationship. If the realtor suggests another financial institution, even if our pre-qualification rate is better, the buyer will go with the realtor’s suggestion because they’ve established trust.”

In the mortgage application process, another emotional experience that category leaders must consider is the mental drain in the waiting period. A prospect submits all the personal data they’ve accumulated since Kindergarten, and then… it’s out of their hands. A McKinsey article on behavioral psych in CX highlights how some category leaders, like Rocket Mortgage and SoFi, combat this: “The company schedules regular touchpoints where agents proactively provide positive news to customers as the process moves forward through various steps. This spreads the pleasure or good news over multiple touchpoints.”

In the Harvard Business Review’s “Know Your Customers’ ‘Jobs to Be Done,’” a condo building company targeting retirees wondered why their carefully researched and designed units weren’t seeing the sales they expected. “Prospective customers repeatedly told the company they wanted a big living room, a large second bedroom for visitors, and a breakfast bar to make entertaining easy and casual; on the other hand, they didn’t need a formal dining room. And yet, in Moesta’s conversations with actual buyers, the dining room table came up repeatedly.

“People kept saying, ‘As soon as I figured out what to do with my dining room table, then I was free to move,’” reports Moesta.

The decision to move wasn’t based on what they needed in a new space or what they lacked, nor did it hinge on money or location. Although those were important early considerations, these detail of deciding what to take or leave became a huge headache when the actual work of moving started. And why? Sentimental value. “Every birthday was spent around that table. Every holiday. Homework was spread out on it. The table represented family.”

Emotions in Car Buying conducted a Car Shopping Journey research study and found that emotions — once again, not interest rate or monthly payment — were the cornerstone of a purchase decision. “Ultimately, many purchase decisions simply come down to emotion. Even though most shoppers did a lot of very rational research, they admit that there is a part of buying a car that is very emotional and irrational. A positive emotion about a car when supported by a feeling that they previously did their research helps buyers pull the trigger and feel good about their purchase.”

Takeaway Across Industries: Yes, Emotions Color Our Decisions

In this section, we reviewed the claim that emotions color, or even control, our decisions. We found that this claim is true across industries and across stages of making a decision, from a consumer’s first touchpoint to their last. “When the decisions humans make are largely based on how they feel, marketers can capitalize by communicating a feeling and removing emphasis on the cold hard facts. You need to appeal to the human, not the buyer.” Source