Asia Pac J Manag (2014) 31:293–308

DOI 10.1007/s10490-012-9341-5
PERSPECTIVES

The rationality of emotions: A hybrid process model

of decision-making under uncertainty

Yan Li & Neal M. Ashkanasy & David Ahlstrom

Published online: 9 January 2013

# Springer Science+Business Media New York 2013

Abstract Decision-making continues to be a vital area of research on organ-

izations, particularly in Asia. After years of research under the cognitive
approach, there has been an upsurge of scholarly attention connecting
decision-making to emotion. Nonetheless, competing accounts of the role
played by emotion in decision-making have created a conundrum as to whether
emotion is rational or irrational and whether it should even be considered along
with other cognitive aspects of the decision-making process. In response, we
derive a hybrid process decision-making model to integrate the effects from
cognition and emotions varying with the levels of uncertainty. In proposing this
model, we seek to differentiate the rationality of emotions from the instrumen-
tal, functional, and expressive mechanisms in decision-making. In particular, we
proffer that affective construal legitimates the rational account of emotions
under high uncertain situation. Finally, we draw some key implications and
recommendations for organizational research in the Asian region.

Keywords Affective construal . China . Emotion . Decision-making . Rationality .

Irrationality . Uncertainty

From Descartes to Hume and beyond, “emotions” were long regarded as synonymous
with irrationality. Passion and reason were antithetical. Emotions were thought to be

Y. Li (*)
Beijing Institute of Technology, Beijing, China
e-mail: y.li@bit.edu.cn

N. M. Ashkanasy
The University of Queensland, Brisbane, QLD, Australia
e-mail: n.ashkanasy@business.uq.edu.au

D. Ahlstrom
The Chinese University of Hong Kong, Hong Kong, People’s Republic of China
e-mail: Ahlstrom@baf.msmail.cuhk.edu.hk
294 Y. Li et al.

chaotic, haphazard, and immature (Ashforth & Humphrey, 1995). It was common to
try to exclude emotions from reasoning and thinking on the basis that emotions were
likely to interfere with the rational process (Barsade, Brief, & Spataro, 2003). This
has been particularly true regarding decision making in China where emotions are
putatively seen as separate from proper behavior, particularly in commercial settings.
Revisiting the potential rationality of emotions, however, has become a timely issue
in recent years partly in response to the improved understanding of emotion in human
intelligence, social discourse, employee attitudes, and decision-making (Ashkanasy
& Humphrey, 2011; Greifeneder, Bless, & Pham, 2011; Li, 2011; Li, Ashkanasy, &
Ahlstrom, 2010; Mayer, Salovey, & Caruso, 2000; Salovey & Mayer, 1990). In this
article therefore, we seek to address this deficiency by discussing the rationality of
emotions in the decision-making process under uncertain situations. We moreover
propose a hybrid process model that combines cognition and emotion as a means to
clarify their varied mechanisms in decision-making. In so doing, we aim to shed light
on better utilizing emotions, particularly their inevitable involvement in uncertainty.
Emotions and rational decision-making have not traditionally been associated
(Ashkanasy & Humphrey, 2011; Salovey & Mayer, 1990). Furthermore, prior to
pioneering work by March (1958), Tversky and Kahneman (1974) and others, it was
commonly believed that decision-makers strove for rationality and the best decisions
were rational and should exclude emotion. Research by Simon (1957, 1959) con-
curred, indicating that while rationality was bounded, most decision-makers still at
least sought to be rational. As a consequence, and as Ashforth and Humphrey (1995)
noted, decision-making research has long been dominated by cognition; emotions
were by and large excluded from accounts of rational thought and behavior.
After almost 50 years of research into the association between cognition and
decision-making since the work of Simon (1959) and March (1958), and the (limited)
role of emotion, emotions’ impact on decision-making under uncertainty have at last
started to attract much research interest (e.g., Bell, 1985; Damasio, 1994; Loewenstein,
Weber, Hsee, & Welch, 2001; Loomes & Sugden, 1982; Mellers, Schwartz, Ho, &
Ritov, 1997; Slovic, Finucane, Peters, & MacGregor, 2002; Zajonc, 1980). Nonetheless,
competing theoretical lenses and conflicting findings concerning the nexus of theory and
practice vexes the current literature. For instance, while some contemporary scholars
(e.g., Damasio, 1994; Greene, Sommerville, Nystrom, Darley, & Cohen, 2001) argue
that emotion is an important element in rational decision-making and ethical judgments,
others integrate emotion into information search, as with the Affect Infusion Model
(Forgas, 1995) and affect as information theory (Schwarz & Clore, 1996). Advocates of
choice theory based on affect event theory (e.g., Ashton-James & Ashkanasy, 2008) also
argue that pre-activated good or bad moods can negatively influence rational decision-
making processes. For these theorists, emotion still has an irrational and distractive
effect on decision-making.
Globalization further demands a new understanding of the effects of emotion in
decision-making, particularly when regional differences result in variations of culture
and social norms (Gong, Chow, & Ahlstrom, 2011; Li et al., 2010; Schlevogt, 2001).
This in turn increases the difficulties and complexity in interpreting feelings (Law,
Wong, Huang, & Li, 2008; Wong & Peng, 2012) and can often serve to obfuscate
important elements likely representative of people’s deep and real desires on choices
and other actions (Li, 2011; Mao, Peng, & Wong, 2012; Wong, Bond, & Rodriguez-
The rationality of emotions 295

Mosquera, 2008). Moreover, with the economic rise of the Asia Pacific region, there
has been an upsurge in international business cooperation, communication, joint
ventures, and other cross-border activities. Correspondingly, increased conflict can
occur between firms from different countries partly because of differences in culture,
institutions, and decision styles (Kozan, 1997). But often neglected is how feelings
underneath these conflicts or other problems impact the ways in which people frame
conflict events, which in turn increases the complexity of the decision and reduces
decision efficiency (e.g., Chhokar, Brodbeck, & House, 2007).
In addressing the above problem, we assert that not only do emotions impact
decisions they are also essential to decision-making. Driven by both the theoretical
and practical impetus, we explicate the ways in which emotion impacts decision-
making in different stages of a decision-making process, revealing both rational and
irrational mechanisms. In doing so, we address three questions: (1) What is rationality
and therefore how to appraise the rationality of emotions? (2) Is emotion necessary
for rational decision-making under uncertainty? (3) How can emotional rationality be
conceptualized in the process of decision-making under uncertainty, while also
differentiating its effects from cognition? In terms of contributions to management
theory and practice, we seek to add to theory in terms of a hybrid process decision-
making model, which integrates emotions into a model of rational decision-making.
In terms of decision-making in China, a more collectivist culture can attenuate
individual expression and even the perceived importance of individual emotions and
feelings (Huang & Bond, 2012; Wong et al., 2008). At the same time, it is important
to understand that a lack of outward expression does not mean that Chinese as
individuals make choices with no involvement of emotion (Li et al., 2010; Li, Hui,
Ashkanasy, & Ahlstrom, 2012). Thus, a comprehensive model that combines emotion
with cognition in the decision-making process should also serve to help us understand
how emotions impact the decision-making process and how these can be anticipated
and managed, which is particularly important in an Asian setting (Ahlstrom, Chen, &
Yeh, 2010; Li, 2011; Tsui, 2012).

Appraising the rationality of emotions

A key question regarding the rationality of emotions is whether emotion plays a

helping or hindering role in organizational decision-making, a question that has
vexed scholars for many years. For example, in The Managed Heart, Hochschild
(1983) argued that service industry employees are required to use their emotions
rationally, in the form of emotional labor, by expressing (and controlling) organiza-
tionally desired emotions that the actor may not feel. Other researchers such as
Martin, Knopoff, and Beckman (1998) maintain that over-expressing personal emo-
tion is harmful to organizations and that employees should therefore show restraint.
Similarly, affect heuristic theory (Slovic et al., 2002) and intuitive cognition theory
(Kahneman, 2003) emphasizes the prevalence and importance of fast decisions, while
conventional rationalists (e.g., von Neumann & Morgenstern, 1944) believe that
organizational strategic decision-makers base their decisions on sophisticated calcu-
lations and analysis of different options; as March (2006: 203) put it, “choice should
be derived from carefully considered expectations of future consequences, not from
296 Y. Li et al.

the dictates of habit, custom, identity, intuition, or emotion.” All of these findings
give rise to the central query about emotion’s role in organizational decision-making,
a corollary of which is what criteria could be applied to assess rationality (Howard &
Korver, 2008).
In this respect, both economic and behavioral theorists have discussed whether
humans are rational agents; so much so that it is commonly held that people regularly
fail to make decisions in a truly rational fashion, where rationality means seeking
maximum utility through deliberative calculation of benefits and costs (Kahneman,
2011; Kahneman & Tversky, 1979). The thinking along this line is represented
primarily in the notions of bounded rationality and satisficing (Simon, 1959) and
other cognitive limitations (Kahneman, 2011). Subsequent experimental research has
also supported the claim that the traditional rational model of decision-making does
not reflect the real way people make decisions (Camerer, 2003; Kahneman, 2006).
These arguments and findings bring to the fore the deeper issue of how to judge
the rationality of a particular behavior or decision. In particular, if utility maximiza-
tion is no longer the benchmark for rational decision-making, then how can rational-
ity and irrationality be differentiated, especially when emotions are involved in
decision-making? The answer to this question may rest in an understanding of the
role and mechanisms of emotions in decision-making. Indeed, a range of views about
rationality have emerged following the realization that calculative rationality often
fails to explain decision-making (e.g., Ariely, 2010; Kahneman & Tversky, 1979;
Simon, 1959), including, for example, bounded rationality, contextual rationality,
game rationality, process rationality, and adaptive rationality (March, 1978). Heap
(1989) created a helpful taxonomy that provides systematic categories, where he
classified rationality into three types: instrumental, procedural, and expressive (see
Fig. 1). Employing this framework, we conceptualize the rationality of emotions in
decision-making from its mechanisms in instrumental, procedural, and expressive
functions and meanings.
In terms of instrumental rationality, decision-making is rational insofar as it
involves choice of the most efficient means for the achievement of a given end.
Moreover, instrumental rationality requires decision-makers to calculate possible
gains and losses. By this criterion, utility maximization could be seen as a
rational decision-making model that follows shared and accepted rules of
decision-making. Moreover, the model includes an assumption that the
decision-makers under instrumental rationality will not violate moral or social
norms. From this point of view, Damasio (1994, 1998) explored the rationality
of emotion by seeking the evidence that emotions can improve decision-making
performance.

Categories of rationality Explanation Prescription

Instrumental Intentional (Supra- or Sub- Consequentialist (i.e., Parto

intentional causality) optimality, utilitarianism)
Procedural Functional (Cumulative, Rights based (i.e., capabilities,
Causation, Hysteresis) exploitation)
Expressive True interest, experimental
Source: Heap (1989: 3)
Fig. 1 Taxonomy of rationality
The rationality of emotions 297

Decision-making may also be deemed rational if the procedural aspects of making

decisions follows certain rules consistently (i.e., in a Kantian fashion, see Howard &
Korver, 2008). For example, if an investment decision is made through the compar-
ison of the expected values between the alternatives, it is seen to be a rational
procedure, regardless of the outcome. This is also normally the case in the practice
of medicine. Procedural rationality also includes functional explanations. Thus, if an
action results in a particular causal outcome, irrespective of whether or not the
outcome is unintended or unrecognized by the actor, then the decision may be
considered rational. But the focus in this instance is on the rationality and care of
which the procedure is followed, rather than the outcome. In other words, if emotions
have causal influences on the choices—no matter whether people are aware of the
emotions in the process of decision-making and their effect—emotion is regarded as
rational in making this decision, insofar as they provide a functional explanation for
this particular decision-making process.
Expressive rationality, on the other hand, reflects decision-makers’ desire to make
sense of the world. People want to understand the world through attribution and
beliefs on causality so that they can act on it (Jones, Kanouse, Kelley, Nisbett, Valins,
& Weiner, 1972; Kelley, 1973; Weick, 1995). Under this criterion, emotion is
considered as rational if it expresses the individual’s preferences and autonomy in
making choices and getting expected or explainable outcomes. Based on the above
criteria of evaluating the rationality of decision-making, emotions can be seen as
rational in decision-making when they express decision-makers’ preferences and
autonomy (expressive rationality) as well the functionality of the cause and effect
in making the decision under uncertainty (procedural rationality).
Whether emotion can improve decision-making performance in terms of instru-
mental rationality is still a debatable issue, however. Conflicting findings have
indicated that emotions might not improve the accuracy of risky and uncertain
decision-making (Bechara, Damasio, Damasio, & Anderson, 1994; Shiv,
Loewenstein, Bechara, Damasion, & Damasio, 2005). In our theorizing, however,
we focus the rationality of emotions on its procedural and expressive mechanisms in
decision-making, rather than using the decision-making performance as a criterion of
emotional rationality. We further review the rationality of emotion in this context and
in terms of decision-making processes according to two criteria: (1) the types and (2)
the effects of emotions in decision-making.

Types of emotions and their rationality

Mood and immediately-felt emotion are two fundamental constructs of emotion

(Forgas, 1995). Mood is essentially a form of pre-activated emotion (Forgas, 1995;
Isen, 1993; Schwarz & Clore, 2003), not initially connected to the decision event at
that particular moment. Wyer, Clore, and Isbell (1999) defined mood as a residual
affective state, whereby mood is a long-lasting emotional experience elicited by the
previous appraised event. Since it is irrelevant to the decision-making event itself,
mood cannot be incorporated into instrumental rationality. Moreover, because mood
is a residual effect of previous activated emotion, it is not a necessary part of the
decision-making process. Therefore, so this reasoning goes, it is also not a part of
procedural rationality. That is why Isen (1993: 58) commented that “affect is still
298 Y. Li et al.

regarded as an outside, irregular, usually disruptive force, rather than as a fundamen-

tal integrated component of human functioning.”
The second type of emotion is in the form of experienced feelings at the time of
decision-making. Loewenstein and Lerner (2003) further categorized these emotions
into immediate emotions (experienced at the time of decision-making), and antici-
pated emotions. The latter are emotions predicted as consequences of an event, such
as regret, surprise, happiness, and sadness regarding possible gains or loss (Bell,
1982; Loomes & Sugden, 1982, 1986; Mellers et al., 1997; Mellers, Schwartz, &
Ritov, 1999). As such, anticipated emotions are directly related to the decision-
making event, and are therefore an integral component of rational decision-making
in terms of procedural rationality. In this respect, Li (2011) found that, when decision-
makers anticipate less fear and less surprise on the possible success of a new venture,
they tend to view the venture as an opportunity with positive consequences (Gilbert,
2005). On the other hand, decision makers who anticipate less anger and regret, as
well as higher contempt of failure are inclined to judge the probability of their success
to be higher. A question still remains, however, as to the functional explanation
underlying these phenomena. We discuss this next.

The effects of emotions

In affect heuristic theory (AHT), Slovic et al. (2002) posited emotions can influence
decision-making directly, similar to the intuitive theory of decision-making
(Kahneman, 2003). One commonality of intuitive theory and AHT is that, while both
include emotion as part of intuition, AHT places more emphasis on emotion’s
functional effects on decision-making, and attempts to put affect as part of reasoning.
From a functional perspective, AHT tends to put emotions as rational constitutes of
decision-making, although this still begs the question as to why emotion should
necessarily be a part of the rationality of decision-making. In other words, while this
idea is supported by the experimental evidence (Bechara et al., 1994; Shiv et al.,
2005), it is still not clear how this conclusion arises within this theory itself. Thus,
while Slovic et al. (2002) argue that a rational model of decision-making needs to
incorporate cognition, affect, and motivation, its relationship to prior rational models
of decision-making under uncertainty (Kahneman & Tversky, 1979; Savage, 1954;
Von Neumann & Morgenstern, 1944) remains unclear.
To solve these problems conceptually, we propose a framework of the rationality
of emotions on decision-making shown in Fig. 2. In this framework, we propose a
hybrid process model that includes both of cognition and emotion. We also differen-
tiate the change of cognitive and emotional states (initial vs. present state), caused by
decision tasks. Notably, we see perception of uncertainty of the decision task as a
watershed that differentiates between two different decision strategies: intuition vs.
boundedly rational analysis. In so doing, we place value on the important influence of
emotion on the formation of new cognition when uncertainty is perceived. In essence,
we propose that the involvement of emotion is inevitable when the decision maker
has to cope with uncertainty.
In comparison to previous decision-making models, such as the AHT and intuitive
theories, the hybrid process model we propose contributes to the literature in the three
ways. First, it combines both cognition and emotion into a decision-making model.
The rationality of emotions 299

Fig. 2 The hybrid process decision-making model of emotion and cognition under uncertainty

Second, it differentiates the effects of certainty and uncertainty, and finally it makes
emotional effects salient (in bounded rational decision-making) as a means to cope
with uncertainty. We amplify this model further in the following paragraphs.

The necessity of emotions in decision-making under uncertainty

We first make the point that emotions do not just interfere with decision-making, but
they are an integral part of the process of decision-making. In this respect, Damasio
(1994: xiii) has been one of the chief purveyors of the view that emotion constitutes a
component of rationality, and claims that, “…certain aspects of the process of
emotion and feeling are indispensable for rationality…emotion and feeling, along
with the covert physiological machinery underlying them, assist us with the daunting
task of predicting an uncertain future and planning our actions accordingly.” Bechara,
Damasio, Tranel, and Damasio (1997) subsequently showed that patients unable to
experience emotion failed to generate anticipatory skin conductance responses
(SCRs) in response to risky choices, even though they realized the choices were
high-risk.
The question remains, however, as to whether such emotional deficiencies have a
positive or negative influence on the performance of decision-making. In fact, the
empirical results diverge on this point. Bechara et al. (1994) found on the one hand
that, when gambling is designed so high-risk choices involve higher accumulative
loss over time than low-risk choices, emotionally deficient patients (who tend to
make more risky choices) end up with less money than normals. On the other hand,
when a game is designed so that high-risk choices lead to higher cumulative gains
than low-risk choices, emotionally deficient patients win more money than their
normal counterparts (Shiv et al., 2005).
These contrasting findings suggest that affect may not necessarily increase the
accuracy and efficiency of decision-making processes; and its absence (e.g., in the
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brain-damaged patients) does not definitively decrease decision performance. In this

case, we have to revisit Damasio’s arguments to justify whether emotions are
indispensable for rationality (assuming of course that decision-making performance
is a criterion to judge the rationality of emotions). In other words, are emotions
helpful in predicting an uncertain future? In this respect, a vexatious issue in decision-
making under uncertainty is how to judge whether a decision is good or bad.
Uncertainty means the absence of a known (i.e., cognitive) causal relationship
between actions and consequences. The lack of mental connection between conse-
quent of decision-making and its reason makes it very hard to judge “what makes a
bet good” (Papineau, 2003: 147). The resulting temptation to seek objective “good
bets” results in the theoretical notion of expected utility. In other words, the objec-
tively good choice is to choose the one with the maximum objective expected utility
among the alternatives. Yet, as we noted earlier, research suggests that real decision-
making violates this rule (Shafir & BeBoeuf, 2002). This in turn means that objective
expected utility may not represent the real utility of the choices in people’s minds.
Therefore, the crucial issue (i.e., whether emotional impact on decision-making is
rational or irrational) needs to be based on the emotional functions linking choice
perception to decision—rather using the outcome of decision as a judgmental crite-
rion. In this respect, Peters (2006: 463) added, “Affect is rational in the sense that
some level of affect is necessary for information to have meaning so that decisions
can be made.”
Thus, the key to resolving the problem of rationality of emotion in decision-making
lies in ascertaining whether affect is a necessary part of decision-making under uncer-
tainty. If affect is a necessary and sufficient element of decision-making, then it is
possible to say that it has procedural rationality, providing a functional mechanism
according to the taxonomy of Heap (1989). Actually, the feeling of uncertainty is
derived from cognitive failure in causality. Thus, if cognition is able to establish a causal
relationship between choice and its consequences, this decision situation is intrinsically
not uncertain. In an uncertain situation, however, persisting in trying to make a decision
close to the objective consequence in the future (or after knowing everything) results in a
reasoning process, leading to an infinite regress (just like a computer program that
cannot converge on a solution). As Heap (1989: 57) noted:
The moment the same question is asked again at this higher level of belief, we
continue what will become an infinite regress which leaves any belief as
potentially rational. The information set agents work with is to be explained
by their beliefs, but there is no explanation of how agents come to hold those
beliefs which is not circular. So, neat as the search theoretic approach may
seem, it will not avoid ugly questions about what non-instrumental factors are
responsible for breaking out of this circularity.
One way to break the cognitive circularity for seeking a perfect choice to match
objective consequences is to interpret the uncertain situation through affective-
construal. This then represents a non-instrumental approach to make the uncertain
choice meaningful (Griffin & Ross, 1991). Affective construal is a kind of subjective
explanation based on emotional knowledge or experience directing to the decision
event and situation. The construal process is a main source of social responses
(Griffin & Ross, 1991). Affective construal provides an affective explanation toward
The rationality of emotions 301

the possible consequences of decision-making, such as the feelings about the possible
gain (or loss) of a choice. In other words, would the decision-maker feel regret after
making the decision? Would s/he feel angry or sad following a loss? How do
decision-makers feel after they win? Do they have enough passion to take a risk?
Affective construal on decision-making provides a subjective explanation to the
outcomes of choices (Gilbert & Ebert, 2002). It is not instrumental to seek the best
choice, rather than affective meanings, such as hope, interest, happy, or joy for the
success or avoid fear, sadness, or regret to the possible failure.
Thus, while the future consequences of choices under uncertainty are unknown,
individuals make sense of their choices through the construal process with the
assistance of affective knowledge, feelings, or experience. In so doing, the decision
is not a gamble; it is made because the choice is meaningful, important, and valuable
for individuals to take a choice at risk (even it is likely to fail). In this respect,
affective forecasting (Wilson & Gilbert, 2003, 2005), expected emotions
(Loewenstein, 2001), and predications about emotional reactions to future events,
are important affective construal processes.
So, what is the source of affective construal? It could be primed from memory of
previous similar-decision situations, although they may not be a perfect match. In this
respect, Damasio (1998) commented:
In human organisms, appropriate learning can pair emotion with all manner of
facts (for instance, facts which describe the premises of a situation, the option
taken relative to solving the problems inherent in a situation, and, perhaps most
importantly, the outcomes of choosing a certain option, both immediate and in the
future. The pairing of emotion and fact remains in memory in such a way that
when the facts are considered in deliberate reasoning when a similar situation is
revisited. The recall allows emotion to exert its pairwise qualification effect.
Within the affect construal view, the reason that people are able to anticipate emotional
responses to the possible consequences of choices is that they are able to retrieve emotional
experiences from previous similar experiences. These affective experiences constitute an
active cognitive process that helps in explaining whether a choice will be approached or
avoided. Therefore, affect in the course of decision-making under uncertainty helps to make
sense of the meanings of the choice—for example, hope for a possible gain; fear of a
possible loss—suggesting that affect constitutes a form of expressive and functional
rationality underpinning decision-making under uncertainty, which is avoid cognitive failure
in making causal linkages between choices and their future consequences.

A hybrid process model of emotions in decision-making

Up to this point, we have argued that affective construal legitimates the functional and
expressive rationality of emotions in tackling the cognitive failure toward uncertainty.
A problem remains, however, insofar as affective mechanisms can become entangled
with cognition in decision-making. Cognitive influences are mainly represented in
three facets (shown in Fig. 2). First, cognition helps with the perception on uncer-
tainty. Second, intuition—as a part of cognition—will be activated to make an
intuitive decision quickly when decision events or tasks are perceived as certain.
302 Y. Li et al.

Third, when uncertainty is perceived, affective construal will be activated (E1) so the
decision-maker can make sense of the decision situation (i.e., emotion as information),
which in turn will provide emotional information and form a new cognition (C1) based
on the value and probability of the choices leading to a bounded rational decision.
The model we propose, therefore, is a hybrid in that it combines both cognitive and
emotional influences to elucidate the decision-making process. In this framework, current
cognitions (C0) and emotions (E0) represent the initial status of decision-making. Current
emotions (E0) are in effect formed as a residual of previous elicited emotions in the form
of mood (Weiss & Cropanzano, 1996). They are then available to be “infused” into the
next decision-making event. As we noted earlier, this process (emotions as infusion) is
irrelevant to the event itself, so its effects are therefore construed to be irrational.
Consequently, decision-makers need to be aware of the role played by mood in their
decision-making, and thus to avoid escalating their positive or negative evaluation of
decision tasks occasioned by pre-activated moods (i.e., carry-over from earlier events).
For example, a senior executive in a multinational corporation needs to take care not to
retreat from an important investment decision (e.g., to establish a joint venture in China)
because s/he is experiencing sadness felt for a personal loss (e.g., a family trauma).
Also represented in our model is the mechanism whereby individuals differ in their
initial cognition (C0) and emotions (E0) because of the varied preoccupied knowl-
edge, feelings, and experiences on decision tasks. Thus, when a new decision task
presents itself, the old experience stored in mind is likely to be primed (Bargh &
Chartrand, 1999), linking similar decision-making situations to the real feelings
elicited by the consequences of that decision. Thus, if the decision task can match
to the old experience, this decision-making situation will be perceived as certain;
otherwise, when the old experience and knowledge cannot explain the current
decision-making task, uncertainty will be perceived. The process and strategy of
decision-making is therefore likely to vary according to perceived uncertainty.
Tiedens and Linton (2001) have shown moreover that certainty promotes heuristic
processing, whereas uncertainty results in systematic processing. Thus, on the one
hand, when a decision problem is perceived as certain, intuitive decision-making
tends to occur, and the problem is seen as routine. When uncertainty is perceived on
the other hand, people tend to process information more systematically (Weary &
Jacobson, 1997). In this situation, a deliberative process will be activated to appraise
the elicited emotions (i.e., by an affective construal process) and to generate a new
cognitive status (C1). This in turn becomes the new heuristic attitude that determines
the choice made. In effect, this is the subjective value (the perceived attractiveness of
the choice) and the subjective probability (the extent to the belief of possible win-
nings) of the choice. At the same time, however, in the process of forming the new
cognition (C1), the expected emotions elicited by uncertainty provide additional
information (such as subjective feelings regarding the possible prospects for the
cognitive process). Finally, through interpreting the elicited expected emotions,
individuals make sense and give the meaning to the choice under uncertainty.
A corollary is that, despite the emotional and cognitive processes involved in
making a decision, the situation cannot be fully explained by personal knowledge and
experience alone. What remains is a residual of the deliberative process, which is then
likely to lead to a situational anxiety. Decisions based on the new cognition (C1:
subjective value, subjective probability, and others) and the associated situational
The rationality of emotions 303

anxiety therefore come to represent bounded rationality in that the deliberative

process cannot fully explain the uncertainty in the cognitive judgment (C1). Finally,
the emotions generated from the bounded rationality underlying the decision-making
process include expected emotions and the effects of immediate emotion on the
choices. Both of these are likely to have a significant influence on decision-making.
In summary, in proposing a hybrid decision-making process model, we posit that
emotions can play an irrational or rational role in the course of decision-making. Thus,
while emotions are likely to be irrational if they are derived from infused emotions or
moods, expected emotions and situational anxiety can reflect the functional and expres-
sive rationality for decision-making under uncertainty. In particular, affective construal
derived from uncertainty provides important information for a new cognitive process. In
this respect, Kahneman (2006: 488) remarked that, “demonstrated deficiencies in the
ability to predict future experiences and to learn from the past emerge as new challenges
to the assumption of rationality.” The proposed hybrid process model of decision-
making provides an approach that links past experiences to the prediction of future
feelings regarding the possible outcomes of decision-making, while revealing the
psychological mechanisms from the rationality of cognition and emotions.
Finally, we stress that the heart of the hybrid process model lies in the affective
construal system. As such, the model provides an explanation for uncertain events
based on affect theory, and answers questions such as: How much does an individual
desire the possible gain? How much can s/he bear the consequences of negative
emotions on a possible failure or loss? How much can the decision maker control
under conditions of either risk or uncertainty (or both)? Thus, through the process of
affective construal, unknown consequences become meaningful for decision-makers.

Discussion

Underlying our theorizing is the basic proposition that emotion can no longer be seen
as some form of “irrational” part of decision-making, which needs to be ignored or
purged from human thought processes. As Darwin (1872) wrote long ago, people
have an emotional system because it is essential for survival; as such, emotions are an
essential component of human adaptability (Damasio, 1994). Emotions are adaptive,
functional, and serve to assist people in the identifying of important information and
organizing of cognitive activities and subsequent behavior. As such, emotions do play
an important part in a rational decision-making process, and are an essential compo-
nent of “smartness” (Goleman, 1995). In terms of rationality, by generating feelings
concerning the risk of possible losses, emotions become a necessary functional
component of sense-making in an uncertain world. Emotions also serve to express
decision-makers’ deep desire and motivation regarding uncertain choices. This is in
contrast to irrationally, which serves to amplify or to reduce the degrees of risk and
uncertainty resulting from pre-infused mood.

Implications for decision-making in the Asia Pacific region

In proposing our process model, we sought specifically to differentiate the rational

and irrational mechanisms of emotion in the decision-making process. This also has
304 Y. Li et al.

some important implications for our understanding of business relations and decision-
making in the Asia Pacific region, where cultures tend to be more collectivist than in
the West (House, Hanges, Javidan, Dorfman, & Gupta, 2004). In particular, while
collectivism can be seen to reduce the importance of individual feelings, evidence
suggests that collective emotional expression can be quite strong (see Sanchez-Burks
& Huy, 2009). As such, the common perception that Asians tend to make choices
without engaging their emotions is not correct. In this respect, Elfenbein, Foo, White,
Tan, and Aik (2007) reported that emotions and emotion recognition play an equally
important role in decision-making for a Singaporean sample as they do in similar
research conducted using Western participants. As such, it is a mistake to think that
Asians somehow use more instrumental or calculative strategies in business decision-
making simply because they tend not to express emotions outwardly. Consequently,
just as is the case in Western settings, it is important not to neglect the expressive and
functional mechanisms of emotions of Asians in decision-making under uncertainty.
By proposing a hybrid process model of decision-making, we argue that we have
demonstrated that emotions play a key role in decision-making because of their
functional and expressive effects on the crucial subject of decision-making under
uncertainty. The model also provides an important lens to integrate how cognition
and emotion interact in perception and sense-making under uncertainty. By so doing,
we hope the conceptual model has helped to resolve confusion about the effects of
emotion in decision-making by clarifying its types and mechanisms. The general
theoretical model is also capable of interpreting the regional decision-making by
incorporating culture into functional and expressive rationality. The dominant
Confucian school in China, Japan, and Korea would likely generate different affective
explanations of uncertainty between self and group from those in individualistic
countries such as in the West. Nonetheless, research on decision making has regularly
shown the importance of emotion in East Asian cultures, contrary to the incorrect
notion of the “inscrutiable Asian” (Li, 2011; Li et al., 2010)

Limitations and future research

Despite the additional understanding that the hybrid process model offers, what we
have proposed is nonetheless still a very general process. We have not addressed, for
example, how people use different forms of emotional information, such as emotional
knowledge, experience, forecasting, or expectation to form new judgments about
uncertainty. Clearly, future research in relation to emotion and decision-making is
needed to explore the specific mechanisms of emotion in decision-making processes
including the processes underlying reasoning and the transformation between emo-
tion and cognition as well as its dynamics. This is particularly important in Asia
where the study of emotion in organizations is still in an early stage (Ahlstrom, 2012;
Li, 2011; Wong et al., 2008).

Conclusion

Emotion has traditionally been associated with irrational decisions. In this article,
however, we have shown how emotion is indispensable to rational decision-making.
The rationality of emotions 305

The hybrid process model we present here conceptually differentiates emotional

functionality in decision-making from its presence in the pre-and post-affect events,
and its interrelationships and conjoined effects with cognition. We argue further that
research on decision-making in the Asia Pacific region needs to account for emotion
in decision-making as well. Despite a common misperception that Asians are some-
how immune from emotions and emotional expression—the fact is that they make
choices with the help of emotion just like their counterparts in the West and
elsewhere, including in commercial settings (Li et al., 2010; Li, Hui, Ashkanasy, &
Ahlstrom, 2012). As such, we hope that this model helps to further legitimize the
potential rationality of emotions as a universal property of sense- and decision-
making under conditions of both risk and uncertainty and that it will guide future
study about emotion and decision-making in the Asia Pacific region as well as other
parts of the world.

Acknowledgments The Asia Pacific Journal of Management would like to thank Rachel (Rae) Pinkham,
Saraswathi “Sara” Sabapathy, and Marc Ahlstrom of Burlington County College for their editorial and
research assistance.

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Yan Li (PhD, The Chinese University of Hong Kong) is an assistant professor at the Beijing Institute of
Technology (BIT) where she teaches management and entrepreneurship. Professor Li studied abroad in
Italy and Australia, as well as Hong Kong and spent several years working in entrepreneurial firms in the
information technology industry in China before entering academia. Professor Li’s research focuses on
emotion, decision making, entrepreneurship, and experimental design and she has published several peer
reviewed articles and book chapters in those areas. She is currently on the Editorial Review Board of the
Asia Pacific Journal of Management.

Neal Ashkanasy (PhD, University of Queensland) is professor of management in the UQ Business School
at the University of Queensland. He obtained his PhD in Social and Organizational Psychology in 1989,
following an 18-year career as a professional engineer. He is a Fellow of the Society for Industrial and
Organizational Psychology, the Association for Psychological Science, and the Australia and New Zealand
Academy of Management, and a past Chair of the Managerial and Organizational Cognition Division of the
Academy of Management. Professor Ashkanasy’s research focuses on the role of emotion in organizational
life, as well as leadership, culture, and ethics. He has published numerous papers in journals such as
Academy of Management Review, Journal of Management, Journal of Organizational Behavior, Organi-
zational Behavior and Human Decision Processes, and Asia Pacific Journal of Management. Professor
Ashkanasy is currently the Editor-in-Chief of the Journal of Organizational Behavior, Associate Editor of
Emotion Review, and is past Associate Editor of Academy of Management Learning and Education. He has
also published six edited volumes, and is book series editor for Research on Emotion in Organizations
(Elsevier/JAI Press). He administers two ListServs (Orgcult—The Organizational Culture Caucus; and
Emonet—Emotions in Organizations) with a combined subscription of over 1,500.

David Ahlstrom (PhD, New York University) is a professor at The Chinese University of Hong Kong. He
obtained his PhD in Management and International Business after working for nearly a decade in
government and industry, including several years in the data communications field. His research interests
include managing in Asia, innovation and entrepreneurship, and management and organizational history.
Professor Ahlstrom has published over 75 peer-reviewed articles in journals such as the Strategic Man-
agement Journal, Academy of Management Review, Journal of International Business Studies, Academy of
Management Perspectives, Journal of Business Venturing, and the Journal of Management Studies. His
work has also appeared multiple times in The Wall Street Journal. Professor Ahlstrom co-authored the
textbook International Management: Strategy and Culture in the Emerging World and guest edited two
Special Issues of Entrepreneurship: Theory & Practice. Professor Ahlstrom also guest edited two Special
Issues of APJM: Turnaround in Asia (in 2004) and Managing in Ethnic Chinese Communities (in 2010),
and was Senior Editor of APJM 2007–2009, before serving as Editor-in-Chief from 2010–2012.
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