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Psychology, Financial Decision Making, and Financial Crises
Full Text HTML (Available to the Public) Tommy Garling, Erich Kirchler, Alan Lewis, and Fred van Raaij How could the current financial crisis have happened? While fingers have been pointing to greedy banks, subprime-loan officers, and sloppy credit card practices, these are not the only contributors to the economic downturn. A new report examines the psychology of financial decision making, including the role of risk in making economic choices, how individuals behave in stock and credit markets, and how financial crises impact people's well-being. Risk taking is a very important component of financial decision making — If we take out a big loan, will we be able to pay it back?
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Cry Me a River: The Psychology of Crying
We’ve all experienced a “good cry”—whether following a breakup or just after a really stressful day, shedding some tears can often make us feel better and help us put things in perspective. But why is crying beneficial? And is there such a thing as a “bad cry”? University of South Florida psychologists Jonathan Rottenberg and Lauren M. Bylsma, along with their colleague Ad J.J.M. Vingerhoets of Tilburg University describe some of their recent findings about the psychology of crying in the December issue of Current Directions in Psychological Science, a journal of the Association for Psychological Science.
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Are Power and Compassion Mutually Exclusive?
The fact that many cultures emphasize the concept of “noblesse oblige” (the idea that with great power and prestige come responsibilities) suggests that power may diminish a tendency to help others. Psychologist Gerben A. van Kleef (University of Amsterdam) and his colleagues from University of California, Berkeley, examined how power influences emotional reactions to the suffering of others.
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Preference Invites Categorization
It is no secret that you know more (that is, have expertise) about things you are interested in. If you hate baseball, you are not going to spend your spare time reading up homerun statistics and debating who the best pitcher is. On the other hand, if you inadvertently tell a wine connoisseur, that you enjoy a particular wine “just because it tastes good”, it will not be long before you are being lectured on different grape varietals and schooled in the different soil compositions of neighboring vineyards. However, it is less clear how we categorize and sort all of those facts related to things that interest us.
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A Walk in the Park Improves Attention
If you spend the majority of your time among stores, restaurants and skyscrapers, it may be time to trade in your stilettos for some hiking boots. A new study in Psychological Science, a journal of the Association for Psychological Science, reveals that spending time in nature may be more beneficial for mental processes compared to being in urban environments. Psychologists Marc G. Berman, John Jonides, and Stephen Kaplan from the University of Michigan designed two experiments to test how interactions with nature and urban environments would affect attention and memory processes. First, a group of volunteers completed a task designed to challenge memory and attention.
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More Than Just Being a Sentimental Fool: The Psychology of Nostalgia
In the 17th and 18th centuries, nostalgia was viewed as a medical disease, complete with symptoms including weeping, irregular heartbeat and anorexia. By the 20th century, nostalgia was regarded as a psychiatric disorder, with symptoms such as insomnia, anxiety and depression and was confined to a few groups (e.g. first year boarding students and immigrants). Only recently have psychologists begun focusing on the positive and potentially therapeutic aspects of nostalgia, report University of Southampton psychologist Constantine Sedikides and his colleagues in Current Directions in Psychological Science, a journal of the Association for Psychological Science.
