Clément Staner

Job Market Paper

Frustration and Personal Motivation Latest version
3rd place IAREP/SABE 2023

Understanding how emotions stemming from previous failures affect investment decisions is critical for the study of choice under uncertainty. I translate insights from the psychological literature into two simple principles to integrate the effect of emotions on investment decisions: frustration stemming from past failures lingers, and success brings emotional relief. Frustration's negative impact on utility creates a trade-off. On one side, the agent wants to limit her exposure to future frustration and decrease investment. Conversely, if her success probability increases with investment, frustration creates an incentive to eliminate its negative effect. In general, the framework allows me to (i)  precisely characterise how frustrating events interact with an agent's preference, environment and past frustration to influence her investment level, (ii) rationalise data patterns, that are hard to reconcile with a single theory. On the empirical side, I investigate the impact of frustration in baseball and find that it increases the speed of pitches and drops in case of success.