How does sadness affect market behavior?

Sadness makes you more eager to both buy and sell. It lowers the reservation price of sellers. Not surprisingly, feelings of disgust make you more eager to sell, but less eager to buy. Here is the home page of the one of the researchers. Here is some press coverage.

Randall Parker suggests: “Avoid shopping or selling things when you are sad.”

An alternative interpretation is that retail therapy is exactly what you need. That being said, I suspect that consummating a transaction is what makes you happy, not buying something expensive per se. Your vulnerability may suck you into spending more money than you ought to, but just sitting at home is a mistake as well. And contrary to what anti-market critics might suggest, loft insulation is unlikely to cheer you up. So what is the real lesson? When you are sad, go visit your local public library. They are almost sure to have something you want, and at the right price.

Thanks to Paul Barriere for the pointer.


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