The Effect of Emotional Cues on Making Economic Decisions under Uncertainty

We investigate the understudied role of emotions on investors’ decision. Specifically, we identify six basic human emotions (i.e. happiness, sadness, surprise, fear, anger, and disgust) expressed by S&P 500 CEOs during their earning conference calls and examine their effects on financial analysts’ decisions (i.e. retain, buy or sell shares). To identify CEOs' emotions in more than 500 calls we developed a deep learning algorithm trained by experts annotating vocal data in a subset of calls. Our findings shed light on underlying emotional mechanisms of financial decision-making under uncertainty, thereby contributing to behavioral economic theory.