Hot State Decision Making White Paper

UNDERSTANDING CONSUMER
EMOTION AND RATIONALITY.

HOT STATE
DECISION
MAKING
THE SENTIENT DECISION SCIENCE
WHITE PAPER SERIES / FALL 2010

SENTIENT DECISION SCIENCE, INC.

Aaron Reid, Ph.D.
areid@sentientdecisionscience.com

Maria Aroxie Perille
mperille@sentientdecisionscience.com

One Harbour Place
Portsmouth, NH 03801
T 603.570.4819 F 603. 570.4817
www.sentientdecisionscience.com

SENTIENT DECISION SCIENCE WHITE PAPER SERIES
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TABLE OF CONTENTS
It’s Getting Hot In Here: The Impact Of Hot-States
3
On Decision Making

Contradictions In Predictions: Underestimating The
5
Influence Of Past And Future Hot-States

Following Your Gut: Emotion As A Driver Of
6
Decision Making

It’s Not Rocket Science: Neuroscientific Evidence Of
6
Emotion In Decision Making

8 Quantifying Emotion: Do Sweat It

Predicting The “Unpredictable:” Modeling Hot-
9 States In Marketing

Effective Techniques For Measuring Emotion:
10
Balancing Depth With Simplicity

Two Human Truths That Maximize Pleasure And
11
Minimize Pain

12 For Consumers

13 In Conclusion

14 References

14 About the Authors

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ou are in the cookie aisle at the grocery store. Like any responsible health-conscious
individual, you are watching your weight and nutrition. You are only in the cookie
aisle anyway because you are on your way to the produce section! Suddenly, your eyes
lock on that big blue bag of Oreo® cookies. You realize you are starving. Against your
better judgment, you impulsively grab the cookies and add them to the otherwise healthy
foods in your cart. Later that day, after you have eaten half the bag, you cannot quite
comprehend what induced you to buy the Oreos®. You are not alone…

IT’S GETTING HOT IN HERE: THE IMPACT can in turn lead to reduced customer loyalty and satisfaction.
OF HOT-STATES ON DECISION MAKING This is the key question for marketers and product managers.
How do we capitalize on real consumer visceral response in the
When consumers encounter promotions while shopping, they short-term while simultaneously building long-term consumer
are compelled to act on their visceral impulses. At Sentient satisfaction? Understanding how hot-state consumer decision-
Decision Science, we call this compulsion hot-state decision making works is critical to maximize pleasure and minimize
making. Hot-states lead to a reduction in immediate pain in your customer base. This paper enumerates
self-control (Loewenstein, 2000), and the why’s behind consumer hot-state decision
many marketing campaigns emphasize making, and in doing so, better arms
immediate action with hot phrases In essence. managers with insight that will lead to
like “One day only!” and “Call now!” more effective short-term marketing
“How do we capitalize on real
Catchy slogans, such as “Hungry? without sacrificing the long-term
Grab a Snickers®,” Nike®’s consumer visceral response in the short- customer relationship.
“Just Do It,” and Sprite ’s ® term while simultaneously building long-term
“Obey Your Thirst,” to tap consumer satisfaction? Understanding how hot- Hot-states are a universal
into these visceral states phenomenon. They are
state consumer decision making works is critical in
and motivate immediate formally defined as visceral
consumer behavior. As a
order to maximize pleasure and minimize pain in your states that markedly
result, consumers often fail to customer base. This paper enumerates the why’s behind deviate from an equilibrium
return to a cold-state, where consumer hot-state decision making, and in doing point, such as satiation
the rational mind might be so, better arms managers with insight that will (Loewenstein, 1996). These
able carry greater weight on moments of heightened
lead to more effective marketing and product emotion are propelled by
the decision.
development without sacrificing the long- physical need-based drives,
From a marketing perspective, term customer relationship.” such as hunger, pain, and sexual
encouraging hot-state decision arousal, and have a profound effect
making has the potential to boost short- on behavior (Loewenstein, 1996). Hot-
term sales since consumers will buy products states often have a negative connotation
during hot-states through simple reminders of because they motivate people to behave in
their visceral depletions (e.g. “I am really thirsty!” or “I forgot impulsive ways. As a result, most traditional economists
how hungry I was!”). However, this may not always be the best have not studied them seriously (Elster, 1998). However, once
strategy for long-term growth since consumers will often regret we understand and are able to quantify emotion’s impact on
their decision later. Research continues to show that people decision making, we can model consumer hot-states in ways
are unable to fully comprehend why they acted so impulsively even traditional economists can appreciate.
in past hot-states (Loewenstein, 1996), and decision regret

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The function of visceral factors is rooted in evolutionary shifted and intensified on a particular object. In the moment,
adaptations that act as survival mechanisms to regulate you have a greater emotional reaction that motivates you to
behavior and focus motivation on what is immediately essential alleviate your hunger and give into your gut, quite literally,
to sustain life (Loewenstein, 1996). When in a hot-state, an rather than abide by your long-term values of
individual narrows his focus on the immediate goal of health and nutrition. Your values have
alleviating or relieving the visceral deprivation. For not necessarily changed. Instead,
example, when someone is in pain, visceral factors the quantity and intensity of the
drive him to alleviate or reduce the pain, which emotion that is elicited by the
becomes his most salient goal. As a result, visceral different stimuli has increased,
factors cause individuals to neglect other long- thereby making some values
term goals in favor of alleviating the negative more prominent than others in
visceral state (Loewenstein, 1996). the short-term context.

The heightened arousal resulting Since hot-states often result
from hot-states also causes a in people acting impulsively
devaluation of other short- to get their drive states back to
term alternatives by equilibrium, they seem to cause a
increasing the value of disconnect between long-term self-
the option most strongly interest and behavior; something that
related to the source is preposterous to the traditional economist
of arousal (Brendl, (Loewenstein, 1996). This is where irrationality enters the
Markman, & Messner, picture. Irrational is often defined as “not endowed with
2003). An interesting reason,” so by definition, if someone makes
illustration of this comes a decision based on emotion alone, he is
from a study in which some labeled as irrational. We can better
participants initially tasted a understand perceived irrationality
small amount of popcorn, which when we know why people
served to heighten their emotions In short. make impulsive decisions that
and value for food, while others did not taste may be self-destructive in the
“Hot-states essentially shift the
any popcorn (Brendl et al, 2003). All of the long-term.
participants then rated the attractiveness momentary weight of specific goals
of various consumer products including and thereby significantly influence It is natural to have an
some food and non-food items. The people short-term decision making.” emotional reaction to stimuli.
who had tasted the popcorn rated non-food In fact, emotion is our most
products lower than those who had yet to taste fundamental cue to what we value.
the popcorn (Brendl et al, 2003). This occurred This draws into question whether
because the popcorn tasters were in a hot-state and emotion should be stigmatized as
thus valued only products that would alleviate their irrational. Hot-states seem irrational on
hunger at the expense of devaluing unrelated products. the surface, and while they are much more
Hot-states essentially shift the momentary weight of specific complex, they are also predictable. Though hot-states lead
goals and thereby significantly influence short-term decision people to value their short-term, immediate goals over long-
making. term goals, they do not necessarily cause people to violate their
self-interest. Instead, values simply shift and immediate goals
Let’s return to our Oreo® example. Assume your long-term become more salient in the individual’s self-interest. Are hot-
goals are maintaining a healthy weight and eating nutritiously. states irrational if they are survival instincts that help focus
However, when you walk into the grocery store your visceral our behavior on what is most important in our immediate
state of hunger is not at an equilibrium point because you haven’t environment? And if not, should we redefine irrationality?
eaten in eight hours. When you see the Oreos®, the driving
force of your hunger leads you to seemingly act irrationally by Before tackling that grand debate, let’s take a closer look
behaving in contradiction to your long-term goals. You are in a at human’s awareness of the influence of hot-states on
hot-state, so you buy and eat the Oreos®. All that has happened their behavior.
is that your emotions, which dictate your preferences, have

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CONTRADICTIONS IN PREDICTIONS:
UNDERESTIMATING THE INFLUENCE
OF PAST AND FUTURE HOT-STATES

Interestingly, people are notoriously inaccurate when
predicting how hot-states will impact them in the
future. As a result, individuals often underestimate the
importance of hot-states and do not have adequate
guardrails in place to ensure they act according to their Irrationality
long-term self-interest.
at work
A fascinating study by Dan Ariely and George
Loewenstein (2005) examined this phenomenon by By understanding hot-states
looking at sexual arousal and its impact on decision and not automatically discounting
making (Ariely & Loewenstein, 2005). When in a cold- them as irrational, we can better
state, and asked to predict how they would act in a hot-
predict and make sense of human
state, participants indicated that they would practice
safe sexual behaviors, such as “us[ing] a condom if behavior. There are many great
[they] didn’t know the sexual history of a new sexual examples of behavior that would seem
partner.” However, once sexually aroused, participants’ irrational, but once they are further
willingness to engage in unprotected and unsafe sex examined with what we now know
increased dramatically (Ariely & Loewenstein, 2005).
about hot-states, they make sense.
In other words, people were unable to predict how they
For example, it is not unusual for firms
would act in a hot-state when they were not currently to downsize to increase profitability.
in that hot-state. Arousal focused the individual’s However, sometimes the opposite
motivation on satisfying the primary immediate goal actually happens the firms suffer because
of sexual satisfaction while discounting other previous downsizing reduces profitability. This
considerations like behaving in safe ways. Similarly, in
may be because downsizing induces
our Oreo® example, the shopper may go to the store
thinking that she will only buy what is on her shopping fear in the workers who become less
list even if she is hungry, but she is unable to fully productive as a result (Kaufman,
understand how she will act when in that hot-state. 1999). Fear is a hot-state, and it drives
people to act in their self-interest by
In addition to underestimating the impact of future avoiding the stimulus, but it also has a
hot-states, people tend to discount the influence of past
negative hedonic impact of causing
visceral states on their behavior. In one study, women
who had previously gone through the pain of childbirth distress. In this case, it also leads
were asked if they would choose to use anesthesia during to a decrease in productivity since
their next childbirth (Christensen-Szalanski, 1984). The the workers fear for their jobs. By
majority said no. However, when they were in the hot- understanding how fear impacts
state of labor for their next child, they overwhelmingly
decision making and behavior,
favored an epidural (Christensen-Szalanski, 1984).
This phenomenon is called temporal discounting
we can better predict how
(discounting the pleasure or pain of a stimulus as it is the workers will react to
further from your immediate environment). the downsizing news.

Temporal discounting helps to explain the relapse in
behavior of many drug addicts because in a cold-state
they cannot imagine how they will act in a hot-state
even though they have experienced many of them before
(Loewenstein, 1996). In fact, past behavior resulting
from hot-states often seems inexplicable to individuals

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since they can remember what they did without emotion, we have no values In a consumer decision making context,
at a cognitive level but have difficulty and preferences upon which to make people develop preferences for products
recreating the level of emotional arousal, decisions (Bechara & Damasio, 2005). based on how the choice options
which is what is at the heart of the hot- Contrary to being a cue to irrationality elicit emotional responses. In essence,
state (Loewenstein, 1996). emotion is a mechanism that is critical emotional reactions inform individuals
for good-decision making. of what they value, and the degree of
Since hot-state decision making is so emotion experienced is an indication
hard for consumers to understand and of the degree of preference. For
predict themselves, one might suspect example, if exposure to the Banana
PAST EMOTIONAL
that it is not possible to measure Republic® brand evokes a rush of
EXPERIENCES
and predict hot-state influences on excitement in a consumer, this
consumer behavior. This may be indicates that the Banana Republic®
the case for traditional economists brand is highly valued. Once brand
but it is not a limitation for today’s preferences are developed through
behavioral scientists. In order to do our emotional value mechanisms
so, though, we must first appreciate they can become cognitive constructs
VALUES
how emotion, and its intensity, drive that we can reference readily to make
the decision making process. quick, consistent choices across the
plethora of brands we encounter daily.
FOLLOWING YOUR GUT: These developed preferences inform
EMOTION AS A DRIVER the decision between a shirt from
OF DECISION MAKING STIMULUS EVOKED OR Banana Republic® and a comparable
ANTICIPATED EMOTIONS shirt from Express®. The emotional
The central influence of hot-state value of the Banana Republic® brand
emotions on consumer decision will likely lead to a choice of the
making has traditionally been Banana Republic® shirt as long as the
overlooked and not adequately emotion for the brand outweighs the
measured quantitatively in market emotional reaction to the difference
PREFERENCES in price between the two brands. In
research. Historically, economic
theories, such as subjective expected other words, since emotions signal
utility, have focused only on a rational, the relative importance of a stimulus
deliberate decision making processes to the individual, then emotion leads
in which individuals essentially weigh to values, which lead to preferences,
their options through cost-benefit CONSCIOUS AND which lead to the decision to buy
analysis (Savage, 1954; Fishburn, 1968). the shirt, and then the subsequent
UNCONSCIOUS DECISIONS
These economic models posit that behavior of actually purchasing the
people should always make decisions shirt. This process is illustrated in
that are in their self-interest. If figure 1 Figure 1.
individuals do not maximize their
long-term expected utility, they are In this way, decisions stem from emotions.
Emotions are adaptive for the individual
labeled irrational. Emotions form the foundation of our
and motivate behavior by signaling
values from our experiences in the past,
factors in our environment that are
Traditional economic theories tend to and emotions are invoked in the present
most important to us (Frijda, 1994). In
disregard emotion as a key force in the and act as a visceral representation of
essence, emotions enable us to navigate
decision making process and discount the what we value.
our complex daily environments, which
fact that people often consciously and
are filled with thousands of marketing
subconsciously rely on their emotions In the absence of an emotional response
messages, by directing our attention
to drive their decisions and behavior to a stimulus (e.g. a Banana Republic®
toward and away from stimuli that are
(Elster, 1998). In fact, most recent shirt), individuals would have to rely on a
relevant or irrelevant to our goals and
research suggests that we need emotion tedious and exhaustive reasoning process
values. Emotions are thus able to signal
to function and make decisions that to determine their preferences (Bechara
what is important to the individual
are in our best interest. Our strongest & Damasio, 2005). The absurdity of this
(Frijda, 1994).
neuroscientific evidence argues that notion is well illustrated in the advice

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Benjamin Franklin once gave his nephew. As the story goes, had VMPC damage. As told by Damasio (1994), he partnered
Franklin’s nephew was distraught because he could not decide with disreputable businessmen, made unwise investments,
between two potential girlfriends. To mitigate his nephew’s experienced a divorce and had several subsequent brief,
internal struggle, Franklin advised him to do “moral algebra,” miserable marriages, and even unwisely denied social security
weighing the benefits against the costs (Gigerenzer, disability payments.
2007). Franklin first instructed his nephew to
create a pro-con list for dating each woman Bechara and Damasio explain Elliot’s poor
by tabulating the two women’s qualities decision processes with the somatic
and shortcomings. He then told his
The irony. marker hypothesis, which suggests
nephew to systematically cross out “The patients with damage to that individuals can eliminate or
equivalent qualities until there their VMPC lacked this essential reinforce alternatives based on
was a clear winner who had more emotional marker mechanism and their initial emotional reaction to
pros left than the other woman. could not filter possible alternatives and them. According to the somatic
Imagine if you had to conduct marker hypothesis, we either
this kind of mental arithmetic for
subsequently acted irrationally. The great feel an immediate sense of alarm
every choice you made throughout irony here for economic theory is that they or experience positive affect in
your day. Exhaustive reasoning? were not perceived as irrational because response to different choices that
Try exhausting reasoning! they relied on emotion, but rather they guide our decisions, almost like
gut feelings (Bechara & Damasio,
were considered irrational because
Consider a consumer deciding which 2005). These gut feelings inform
house to purchase by precisely listing they did not use emotion.” us of the potential consequences of
all the possible attributes of multiple certain decisions and allow us to consider
options and then determining which house the future and our own wellbeing.
has the most logical reasons in its favor. One
house may have hardwood floors whereas another The patients with damage to their VMPC lacked this
does not, but that house is not necessarily better suited for essential emotional marker mechanism and could not filter
the consumer and may not make him happier in the long-run. possible alternatives and subsequently acted irrationally. The
Even after listing all of the pros and cons, in the absence of great irony here for economic theory is that they were not
emotion the poor consumer still would not be able to decide perceived as irrational because they relied on emotion, but
(Bechara & Damasio, 2005). He needs to take his emotional rather they were considered irrational because they did not use
responses to the attributes of each house into account to arrive emotion. In contrast to standard economic theory, the VMPC
at a meaningful preference. patient research provided alarming evidence of emotion’s
critical role in functional decision making.
IT’S NOT ROCKET SCIENCE:
NEUROSCIENTIFIC EVIDENCE OF The somatic marker hypothesis goes a long way in emphasizing
EMOTION IN DECISION MAKING the importance of emotion in decision making. Yet, at the same
time, by only taking valence into account and not the degree
Evidence for the critical role of emotion in decision making of that emotional reaction, the somatic marker hypothesis is
comes from the neuropsychological literature. Bechara and limited in its quantitative explanatory power. This limitation
Damasio determined that emotions are an integral factor in spurred new quantitative research on the impact of emotion in
decision making by studying patients with damage to a specific decision making.
part of the brain, the ventromedial prefrontal cortex (VMPC).
The VMPC is implicated in planning as well as risk and fear A standout emotion-based model that advances beyond the
processing (Bechara & Damasio, 2005), and patients with simple valance flagging nature of the somatic marker hypothesis
VMPC damage have serious deficits in decision making. The is the predictor-valuation model from Montague and Berns
patients with VMPC damage take an abnormally long period of (2002). The predictor-valuation model finds its footing in
time to make decisions, and their ultimate decisions are often neuroeconomics, which seeks to evaluate how individuals make
not in their best interest. decisions by examining brain regions. The model suggests
that there is identifiable neural activity that can explain the
A VMPC patient named Elliot provides a startling example. valuation of objects by regulating economic appraisals of
Before damage to his frontal lobes, Elliot was a smart, successful stimuli. A neuroimaging study on the consumptive behaviors of
businessman. Life as he knew it began to deteriorate when he monkeys revealed how common activity in the orbitofrontal-
could no longer make decisions in his best interest because he striatal (OFS) circuit allows for the valuation of objects that are

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otherwise not easily comparable (Montague One such model that quantifies the weight
& Berns, 2002). By using a common currency of emotion is the proportion of emotion
of reward expectancy, the model explains model (Reid & González-Vallejo, 2009).
the valuation of objects with very different This model is a better predictor of behavior
attributes (Montague & Berns, 2002). than a simple additive emotional models
(e.g. Montague & Berns, 2002), because
To draw a comparison to consumer decision it combines consumer emotions and
making, traditional models have difficulty rational assessments into a single predictive
finding a common denominator to compare algorithm. The model further explores the
the relative value of drinking six ounces of complexities of decision making that other
water to eating six ounces of broccoli, yet winner-take-all models, such as the somatic
these two different alternatives can easily marker hypothesis, either ignore or take for
be compared with the predictor-valuation granted. Whereas Bechara and Damasio’s
model by analyzing activity in the OFS. (2005) somatic marker hypothesis and
“By quantifying
its extensions posit that the strongest
Since values are derived from emotion, the valence signal “wins” and determines emotion, we can better
model provides even greater physiological subsequent action, the proportion understand the complexities of
evidence for the importance of emotion in of emotion model finds its unique emotional intensity and how emotion
decision making. Yet, the predictor-valuation contribution in the way rational
interacts with our rational minds
model is silent on the higher order cognitive cognitive trade-offs combine with
processes at play in decision-making. With emotional weights in a single to inform our decisions. The ability
its “winner-take-all” emotion algorithm predictive choice formula. to accurately quantify emotion is
the model does not clearly distinguish the critical to predicting consumer
difference between cognitive assessments In a series of studies that evaluated the hot-state decision making.”
of symbolic information and emotional model, participants’ emotional reactions
responses in the valuation that are observed to different stimuli, such as consumer
in the OFS (Reid & Gonzalez-Vallejo, choices between diamond rings, financial
2009). This cognitive hole in the model gambles, and mate selection, were measured
begs for a more robust perspective that by skin conductance response (SCR). SCR
can simultaneously incorporate the impact uses electrodes to measure the microseimen
of hot-state emotions and cold cognitive units of sweat produced in one’s palms,
deliberation that defines so many consumer which is a measure of visceral arousal. Since
decisions. SCR only measures the quantity of emotion
and not whether it is positive or negative,
QUANTIFYING EMOTION: a valence measure was also employed to
DO SWEAT IT determine whether the arousal was approach
or avoidance emotion (Reid & González-
Emotion’s role in decision making is more Vallejo, 2009).
complex than just identifying what types of
emotion are triggered by certain products. The studies demonstrated that emotion
And while the valence of emotion plays a can serve as a tradeable common currency
vital role in decision making, the weight and in decision making, like reward expectancy
intensity of that emotion is equally important in Montague & Berns’ (2002) study, such
from a market research perspective. In that emotional arousal is a measure of how
order to enhance the accuracy in predicting much a consumer values a particular choice
behavior, it is necessary to quantify emotion. attribute (Reid & González-Vallejo, 2009).
By quantifying emotion, we can better At the same time, the proportion of emotion
understand the complexities of emotional model goes beyond the common currency
intensity and how emotion interacts with described by the predictor-valuation
our rational minds to inform our decisions. model because it combines both symbolic
The ability to accurately quantify emotion information and affective weights.
is critical to predicting consumer hot-state
decision making.

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To illustrate the cognitive and emotional trade-offs in a elicited to the carat size stimulus as compared to her emotional
consumer decision, envision a young single woman passing by a reaction in a cold-state. Because the proportion of emotion
Tiffany & Co. store with a couple of friends. As any fantasizing model effectively captures the emotional weights of different
young woman would do, she casually decides to go into the store attributes and quantifies their impact relative to cognitive
and look around. At one of counters there are two emerald-cut considerations, it can predict what consumers’ preferences will
rings. One ring is .83 carats and costs $5,250; the second ring is be in a hot-state.
1.05 carats and is $9,300. During this casual browse, the woman
imagines that she wouldn’t have a strong preference for either This has profound implications for how we conduct market
diamond ring (a classic example of temporal discounting). If research. If we are in a category where purchase decisions are
we were examining this young woman’s choice in a laboratory commonly made in a hot-state, then our research will need
setting, her palms would produce essentially the same to assess which attributes evoke the most hot-state emotions
proportion of sweat when considering the price and carat size thereby carrying greater weight in the decision context. If
of each diamond ring. marketing predictive models are always built on consumer
valuation during cold-states, we can expect that those models
Fast-forward two years. The same woman is madly in love and will be off the mark when trying to predict consumer behavior
recently engaged. She and her fiancé elatedly enter a Tiffany & in a hot-state environment. This calls for more elegant research
Co. store in search of that perfect engagement ring. Her eyes design that can evoke consumer hot-states (e.g. deprivation
lock upon that same 1.05 carat diamond ring and the smaller exercises, priming and other saliency cues) and assess what is
one next to it. Her hot-state changes everything. She now has a most important to consumers when in that mind set.
stronger positive emotional reaction to the larger carat size and
while she is cognitively struggling with the higher price, she PREDICTING THE “UNPREDICTABLE:”
doesn’t feel the same strong negative sting when considering MODELING HOT-STATES IN MARKETING
the $9,300 price tag. Her hot-state emotions are functioning
as a weighting mechanism on the differences in the diamond Since hot-states change the emotional weights that are elicited
attributes as she cognitively goes back and forth between in correspondence to different alternatives, the proportion of
the options. In a hot-state, when the larger diamond arouses emotion model can quantify the intensity of emotion that hot-
the woman, she has a disproportionate amount of emotion states induce. In the diamond ring example employed by Reid

QUANTIFYING THE GUT: A MODEL OF HOT-STATE DECISION MAKING.
The sign and magnitude of d* determines the strength of
preference. If d* is positive, then the consumer will choose
the more expensive 1.05 carat ring. ß1 is the degree of the
emotional reaction to the carat size, and ß2 is the degree
of the emotional reaction to the price, measured by SCR.
These variables indicate the importance for carat size and
price, and they are weighted against the cognitive sym-
bolic information for each attribute.

Cold State Example: Hot State Example:
In a cold state, the carat sizes evoke a degree of arousal However, in a hot state, the same carat sizes evoke a degree
equal to 0.49 microseimen units of sweat, and the price of arousal equal to 0.65 microseimen units of sweat, and
tags evoke 0.39 microseimen units of sweat. Proportion- the price tags only evoke 0.23 microseimen units of sweat.
ately, the emotion elicited by the larger diamond is not Now, the emotion elicited by the larger diamond size over-
enough to outweigh the negative pull of the cost. whelms the negative pull of the cost, and the bride-to-be
decides to purchase the more expensive ring, as the equa-
tion above demonstrates.

d* = -0.08 d* = 0.04

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and González-Vallejo (2009), the two attributes were carat size Psychophysiological Techniques
and price. When individuals are in hot-states of desire rather Psychophysiological methods are perfectly suited for
than cold-states, their values of the two attributes based on revealing consumer emotion. Participants are brought into
symbolic information will be stable, but the emotional weights a lab or consumer testing center and are presented with
tied to each attribute will change according to the rise and varying stimuli (brands, static and dynamic advertisements,
fall of their emotions in the moment, thereby influencing the new products, etc.) and their natural physiological response
decision outcome. to the exposure is recorded. There are advantages and
disadvantages to the various techniques which are reviewed
Mathematically, this engagement ring shopping experience is below.
represented by the equation below. The ring that the woman
chooses in her hot-state has a carat size of 1.05 and costs Functional Magnetic Resonance Imaging (fMRI)
$9,300 while the other ring is 0.83 carats and costs $5,250. fMRI measures blood flow in the brain. Brain scans show
In this scenario, the value of ß1 increases so significantly in which areas of the brain are most active when processing
the hot-state that it causes the positive pull of carat size to a stimulus (e.g. exposure to a brand, advertisement, new
dominate the negative pull of price, thus shifting the direction product, sensory sample, etc.).
of choice. The couple purchases the ring in the hot-state but
not in the cold-state. Some of the advantages of fMRI include:
• Brain scan data is hard to argue with (results are
EFFECTIVE TECHNIQUES FOR very convincing to clients)
MEASURING EMOTION: BALANCING • Definitive emotional data (interactions with
DEPTH WITH SIMPLICITY Amygdala and stimuli)
• Heat maps show level of activity across all
Since emotion and hot-states play such a central role in decision regions of the brain
making, market research firms that measure emotion can
more accurately predict consumer preferences and behavior. Some of the disadvantages of fMRI include:
Effective techniques need to merge both a quantitative and • Not yet broadly available to business community
qualitative analysis in order to explore decision making as • Unnatural environment for participants (in tube)
more than just a winner-takes-all process. After taking into • Time consuming to collect data (one at a time
account attribute importance as well as emotional intensity participation)
and combining this with qualitative research methods, • Less representative than larger sample response
research firms can then assess the impact of hot-states on time techniques
consumer decision making. • Time consuming to analyze data
• More expensive than EEG, SCR and Response
The advent of neuromarketing and brain imaging research Time techniques
provide a wealth of data that support emotion’s quantitative
impact on the decision process. Technological tools such as Electroencephalography (EEG)
fMRIs and EEGs measure the neural activity in different EEG measures electrical brain wave activity across the
functional areas of the brain, thus providing insights into entire brain region to show which areas of the brain are most
physiological valuation mechanisms. Yet, while the idea active when processing a stimulus (e.g. exposure to a brand,
of having access to millions of neural data points sounds advertisement or new product).
convincing, these techniques produce data with a large
amount of noise and thus require this level of measurement Some of the advantages of EEG include:
in order to achieve stability. In addition, some techniques, • Brain wave activity is very convincing to clients
including fMRI, are expensive, time consuming, and are • Test arousal and boredom (alpha, beta and theta
only able to evaluate one individual at a time in a relatively wave activity)
unrealistic environment, which may have consequences for • Frontal lobe activity differentiates between
evoking relevant hot-states. In contrast, priming and response approach related emotion (left frontal lobe) and
time methods get around these issues by assessing emotional avoidance related emotion (right frontal lobe)
connections on hundreds of consumers in a single day. Yet • Less expensive than fMRI
these methods also have their own limitations. Reviewing
which method is right for your research question as you design Some of the disadvantages of EEG include:
a study to model hot-state decision making is critical. A brief • Time consuming (one at a time participation)
review of methods follows.

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• Less representative than larger sample response
time techniques Some of the advantages of priming and response
• Time consuming to analyze time techniques include:
• More expensive than response time techniques • Captures subconsciously activated goals to
determine product and brand success at delivering
Skin Conductance Response (SCR) on those goals.
Skin conductance response (SCR) is a psychophysiological • Reveals the strength of automatic emotional
method for measuring degree of arousal. It is a method that is associations with products, packaging and brands.
used widely for “lie detection” because it serves its purpose of • Determines the subconscious attribute associations
revealing what people may not be willing or able to tell us about that connect with activated goals to drive
their emotional responses. As detailed above, Reid & Gonzalez- emotional preference.
Vallejo’s (2009) use of SCR shows how incorporating emotion • Provides emotion-based ROI by tying into brand
into traditional models of choice increases the accuracy in premium measures at the individual level and
predicting consumer preferences between diamond rings. predicting future market sales.
• Delivers a practical and efficient solution:
Some of the advantages of SCR include: implemented in person or in online studies to
• Emotional data is not dependent on self-report collect hundreds of completed interviews each day
• Ability to show concepts, messaging, designs and across market segments.
gauge emotional response • Cost-effective relative to Psychophysiological
• More natural participant environment (non-invasive methods.
and greater mobility)
• Less expensive than fMRI and EEG Some of the disadvantages of priming and response
time techniques include:
Some of the disadvantages of SCR include: • Harder to show link to brain activity to clients
• Labor Intensive (brain wave data is very convincing)
• Time consuming data collection (one participant at • Online environment is not as controlled as lab or in-
a time) person research center
• Extensive data analysis time • Accurate data interpretation is critical
• More expensive than response time techniques
Emotional intensity can be measured with any of the above
Priming and Response Time Techniques physiological or behavioral methods. These measures are then
Priming techniques were originally developed in the Cognitive plugged into the proportion of emotion model as emotional
psychology literature and were adapted by Social Psychologists weights to predict consumer choice. Once you’ve implemented
to study stereotypes (an area where people either can’t or won’t research techniques to measure consumer emotion you’re
reveal their true emotions). These methods have been recently in a position to apply this knowledge to the benefit of your
adopted in the study of consumer behavior (Dijkerthuis et al., business and the marketplace. This places us back where
2004). The IAT (Greenwald & Banaji, 1995) and Sentient’s we began, with the power to influence consumer hot-state
Automatic Brand Associations (ABA) and Subconscious decision making we have to ensure that we’re winning in both
Activation of Goals (SAG) methods measure the impact of the short and long term. We need to maximize pleasure and
subconscious processes (including emotion) on choice and minimize pain for our consumers.
willingness to pay price premiums for products.
TWO HUMAN TRUTHS THAT
Using these methods, researchers can collect data from MAXIMIZE PLEASURE AND MINIMIZE
representative samples of hundreds of shoppers to ensure PAIN FOR CONSUMERS
that the subconscious findings are generalizable to target
populations. The method can be run among qualitative Understanding hot-state decision making can provide a
research participants following exposure to products in focus significant short-term boon in purchase behavior. But ethically,
groups or IDIs. Total sample sizes can be as small as 25-30 or up and from a long-term business health perspective, we don’t
to hundreds or thousands of consumers broken out by market want to sacrifice long-term consumer satisfaction for short-
segment if the method is run using online software. term reward.

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The first note of solace on the ethical front is this: people do passionate about certain long-term values, then you can be
not respond emotionally to things they don’t value. Thus, if sure that activating goals related to those values will arouse
a consumer is responding emotionally to your product, it is consumer emotion.
because the value for that product is inherent in the consumer.
The debate on consumer values, and the attempt to influence As an example, consider again the rising cultural values of
what consumers actually value, is better left to be battled sustainability and environmentalism. These are concepts that
on the socio-cultural level. Consumer values are influenced arouse a lot of emotion in certain segments of the population.
heavily by culture and that cultural influence is in a From a hot-state decision making perspective this is
continual state of evolution. For instance, in the ripe for capitalization. If you offer a product or
U.S. there is currently a growing cultural value service that is consistent with these values,
for sustainability and care for our natural you are in a unique position to capitalize on
environment. As the culture exerts If you are a marketer or hot-state decision-making while simulta-
its influence on the consumer, the neously delivering on consumers’ long-
emotional response to products and
product manager, you can put this term values. Marketing that raises the
services that align with sustainability first human truth to use by answering salience of consumer environmental
and environmentalism heightens, the question: which of my product values will heighten in-the-moment
and the market then has a sure sign benefits arouse emotion in the short- arousal. Delivering a product that sa-
that these values are increasing in tiates that desire produces an imme-
term while also arousing emotional
importance for consumers. Thankfully, diate sale that simultaneously avoids
most enterprises are in the business satisfaction in the long-term? post-decision regret because it is in line
of providing products that consumers with long-term values. This maximizes
value, rather than imbuing consumers with pleasure and minimizes pain.
values. Those values are largely coming from
external sources. If you are a marketer or product manager, you
can put this first human truth to use by answering
Second, from a business model perspective, a the question: which of my product benefits
short-term visceral delight that is followed by arouse emotion in the short-term while also
deep post decision regret does not have arousing emotional satisfaction in the
any legs for sustained business growth. If you are a marketer long-term?
We do not want to induce regret in a or product manager, you can
consumer base whom we’re hoping put this second human truth to use The second truth is that the human
will praise and recommend our by answering the following questions: condition is characterized by a
products in the marketplace. This constant state of reconciling short-
creates an interesting challenge
how does my product suite provide term decisions with long-term
for the marketer and product options that serve consumers’ short-term goals. On a daily basis, consumers
manager. How do we capitalize on as well as long-term goals? How well is are faced with decisions that
hot-state decision making while my marketing providing consumers satisfy short-term needs while
simultaneously delivering a satisfying compromising long-term values. To
with reasons for their purchase that
experience? Two basic human truths reconcile these conflicts, consumers
help answer this question and serve justify their decision? conduct a “mental accounting”, not
as guides in implementing hot-state allowing themselves to get too far afield
decision making in your initiatives: from their ultimate goals. Consumers do
this in two ways. First, when consumers feel
The first truth is that not all hot-state decision too deviated from those long-term goals, their
making is in conflict with long-term goals. In fact, inducing decision making realigns naturally with those goals because
hot-state decision making within a context that is consistent they begin to feel greater emotion for choice options that
with long-term goals is the perfect storm: you create immediate put them back in sync with their long-term values. Second,
consumer delight without any lingering post-decision regret. consumers use post-decision justification to reconcile their
Hot-states can be aroused in relation to long-term values, short-term choices with their long-term goals. We call this
just as they can be for short-term visceral delight: all that is justification “cognitive recalibration.”
required is the evocation of emotion. Thus, if consumers are

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In Conclusion
For marketers and product managers, The heightened levels of arousal
this human truth is critical for business that define hot-states play a powerful
planning. The human tendency to role in consumer decision making. Since
consume short-term rewards is part and
consumers are often in a hot-state when
parcel of who we are and that tendency
is not going away. This creates a natural they make the decision to purchase a given
market for products. product, it is essential marketers and product
managers understand the dimensions of hot-
If you are a marketer or product manager, states and how their products and brands align
you can put this second human truth to
in order to better predict consumer behavior.
use by answering the following questions:
how does my product suite provide
Many current market research techniques do not
options that serve consumers’ short-term sufficiently quantify differing degrees of arousal,
as well as long-term goals? How well is and thereby cannot accurately predict how
my marketing providing consumers with consumers will behave in a hot-state. Cold-state
reasons for their purchase that justify research may lead to predictive models that lack
their decision?
validity in hot-state consumer situations.
For example, if you are in the Salty Snack
category, you might ask yourself how well is Very few models on the forefront of psychological
my marketing inducing short-term arousal research effectively incorporate consumer hot-states
that is easily justified cognitively after into the decision making equation as well as the
the fact. If one of your products is seen proportion of emotion model does. To understand
as a guilty pleasure, or special indulgence,
consumer hot-state decision-making and continue
messaging around the fact that periodic
indulgences are justified will help reduce to move the industry forward, it is our responsibility
consumer post-decision regret. Similarly, if as market researchers to continually improve on
your product line lacks a snack that aligns existing models. Enterprises that incorporate
with consumer long-term values of healthy techniques in their research toolbox to effectively
eating, you are likely losing significant
leverage emotion and its weight in the decision
revenue to a competitor who offers that
choice. An optimized product line allows
making process will have models of consumer
the consumer to wax and wane between behavior that more accurately predict future
her short-term and long-term values while market trends. Using behavioral science
still remaining within your brand suite, techniques to model emotion and following
thereby maximizing her pleasure and the human truths of hot-state decision-
minimizing her pain naturally.
making will empower marketers and
product managers to maximize
pleasure and minimize pain for
consumers and thereby benefit
both short-term and long-
term business goals.

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ABOUT THE AUTHORS

Aaron A. Reid, Ph.D. / Maria Perille /
Chief Behavioral Scientist Behavioral Science Intern,
Sentient Decision Science, Inc. Sentient Decision Science, Inc.

Dr. Reid is Chief Behavioral Scientist at Sentient Decision Ms. Perille is an Economics and Psychology double major
Science with over 15 years of experience studying consumer at Middlebury College with a keen interest in the drivers
decision making and advising global brands on the drivers of of consumer behavior. Maria’s research at Sentient has
behavior. included investigation of the Decoy Effect in a consumer
decision-making context, Automatic Brand Associations,
An experimental psychologist by training, Dr. Reid’s areas of and the application of the Proportion of Emotion model in
expertise include how emotion influences behavior, advanced the Consumer Packaged Goods vertical. Maria’s background
consumer choice modeling and the subconscious drivers of research in hot-state decision making helped form the
brand associations. With a published research record in foundation of this paper and her examples helped bring the
consumer decision-making, Dr. Reid commonly presents story to life.
novel research and mathematical models of consumer behavior
nationally and internationally. More writing by Dr. Reid and Ms. Perille on how behavioral
science principles are applied to real world behavior can be
found on: www.sentientinsight.com and
http://twitter.com/SentientInsight.

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