Researchers at Princeton University are using brain-imaging technology to study which parts of the brain - the ones that control emotion or the ones that control rational thought - essentially "light up" when someone makes economic decisions.
They've concluded that when emotions win out over rationality abilities, people's choices often go against their self-interest.
Such research is getting attention not only from psychologists, but also from economists, who traditionally have ignored emotion and have assumed that people make rational decisions.
Real estate agents have known this for a long time.
"I've had occasions where I've had to say to my clients, 'Wait a minute. You told me you had five priorities in selecting a house to buy, and this place has none of them. And yet you tell me this is the one?' " Chicago-area agent Colette Cachey says.
"Sometimes people want to buy a place, and they just don't know why. I had a couple who were expecting a baby, and they bought a four-story walkup condo. They said they guessed the light and space drew them," Cachey recalls, sighing.
"I want to take psych classes instead of business classes for my continuing education."
Connecticut broker Adorna Carroll, who conducts seminars on negotiation strategies, says emotions tend to show up most vividly in negotiating the contract. For reasons that have nothing to do with rational thought, deals get stuck there, she says. She offers four hints:
Re-establish common ground on a personal level with the other negotiator. She suggests softening the approach and complimenting the other negotiator's strengths.
Bring in new information, such as, "Since we last spoke, our loan has received pre-approval rather than just pre-qualification." This allows the conversation to reopen.
Change the negotiator. This may mean bringing in a partner or going to the real estate office's owner or manager.
Change the venue. When negotiators are heavily invested in the issue, changing the scene to breakfast, dinner or drinks can reduce tensions.
The Chicago Tribune is a Tribune Publishing Newspaper