Blends of Expected Emotion on the Subjective Value and
Probability of New Venture Creation
Yan Li
Research Fellow
City University of Hong Kong
Faculty of Business Administration
Department of Management
Kowloon, Hong Kong
Tel: 852-3442-5677
Fax: 852-2788-7200
E-mail: [email protected]
ABSTRACT
Multiple expected emotions were employed in this study in predicting the subjective value
and probability of new venture creation. The intensity of regret moderates the relationship
between motivation (hope) and value judgment. Surprise negatively related to value judgment.
This study found that value judgment was more tasks -specific, trait emotions did not influence
value judgment; on the opposite, probability judgment on the success of new venture creation
was influenced by both of trait sadness and discrete expected emotions like hope, regret and
surprise as well. This study further examined that the effect of happiness on the possible
success of creating new venture was replaced by the motivation of creating new venture.
Key Words: Expected Emotions, Subjective Value, Subjective Probability,
New Venture Creation
INTRODUCTION
New venture creation lies at the heart of entrepreneurship. It includes planning, organizing
and establishing a new organization. Deciding to create a new venture is likely to enter into a
paradoxical situation, either “missing the boat” or “sinking the boat” (Mullins, Forlani, 2005).
And the process of making such a decision under high uncertainty has been examined to be
influenced by cognition (Baron, 1998; Simon, Houghton, & Aquino, 1999). Affective process
also is proposed to play an important role in entrepreneurship including new venture creation
(Baron, 2008). Upon the risky situation of new venture creation, the judgment on subjective
value and subjective probability of creating new venture are considered as important variables
in predicting people’s risk preference (Savage, 1954). However, research questions remain and
give rise to: why the estimations on the attractiveness or desirability (subjective value) and the
likelihood of success (subjective probability) of starting-up exist individual differences? What
is the relationship between emotional expectation on the possible outcomes and the judgment
of subjective value and subjective probability? These are the focal questions this study tries to
address.
The value and probability judgment have been examined systematically not basing on
deliberative calculation (e.g., Kahnman, & Tversky, 1978). Various theories were proposed to
take into account the psychological mechanism of value and probability judgment. Cognitive
theories, for example, heuristic and biases, shed light on that people make fast judgment by
intuition via representative, availability and biases (Kahneman, D., & Tversky, A. 1982;
Tversky, A. & Kahneman, D. 1973). Some theories regard that the judgment contains the
elements of people’s motivation (Bagozzi, Dholakia, & Basuroy, 2003; Shah, & Higgins,
1997). And emotions are therefore regarded to influence judgment. The research on judgment
also was switching from belief based view to emotional approach (Clore, Gasper, & Garvin,
2001) in the recently thirty years.
What Kinds of Emotions?
Most of the prior studies about judgment and emotions are mood centered (e.g., Forgas,
1991). Mood generally is defined as a diffused affective state with less intense and relatively
enduring. It is not supposed to direct toward any particular object, target, or behavior (Moore
and Isen, 1990; Forgas, 1991). Some other emotions studied in the area of judgment are target
or event relevant, like anticipant emotions (expected emotions on the possible outcomes of a
decision) and immediate emotions (situational emotions that occur at the moment of making a
decision) that were systematically conceptualized in Loewenstein and Lerner (2003). Not only
did the conceptualization on the emotions in judgment includes mood, anticipant emotions and
immediate emotions, which are categorized by the criterion of relevance to the event and the
process of judgment; it also is related to the properties of the valence and discreteness of
emotions.
To date, debates have been continuing about whether emotions are simply dimensional
differentiated by valence or discrete and whether each emotion has unique function. Some
researchers applied dimensional emotions in decision making study. In this kind of approach,
emotions were simply aggregated into positive and negative hedonic tone. However,
dimensional emotion structure was criticized by discrete emotion researchers (Cropanzano,
Weiss, Hale & Reb, 2003) and the simple aggregated positive and negative emotional
dimensions can not explain more than its discrete components. Roseman, Wiest, Swartz (1994)
examined that each discrete emotion, for instance, fear, sadness, distress, frustration, disgust,
dislike, anger, regret, guilt, and shame, has distinctive goal, action tendency, as well as thought
and feeling. In the decision making process, Lerner, & Keltner (2000) experimented and found
that both fear and anger are negative emotions but differ in risk perception. Therefore, the
researchers are strongly suggested to base decision making on emotion-specific approach
rather than general positive negative dimensions.
After reviewing the literatures about emotions in the process of decision making, this study
narrowed the emotional focus to anticipant discrete emotions on the possible outcome of
decision making. In the recent research of discrete emotions and decision making, multiple
emotions appeared in predicting decision making (Mellers, Schwartz, Ho, & Ritov, 1997)
instead of single emotion, for instance regret (Bell, 1982; Loomes, & Sugden, 1982),
disappointment (Loomes, Sugden, 1986). However, as the argument in study one, these kinds
of studies made decision making visceral if emotions are employed to predict decision making
directly. In reality, some of decisions have to be made by cautious analysis like creating new
venture. Therefore, I prefer herein to use emotions to take account of the judgment of
subjective value and probability on risky choices rather than decision making itself. However,
so far there are few studies in exploring how multiple discrete emotions influence on the
judgment of subjective value and probability. As such, theoretical justification is necessary to
count why multiple emotions are able to predict subjective judgment on value and probability
and its contributions in contrast with single emotion.
Blends of Expected Emotion upon Multiattribute of Reality
Just like not only are colors comprised of white and black, our emotional experiences do
not merely have simple positive and negative properties. Emotions reflect various properties of
the interaction between people and reality. More and more, emotions are found different in the
ways of face expression (Ekman, Sorenson, & Friesen, 1969; Izard, 1971; Tomkins &
McCarter, 1964), physiological states (Thompson, 1988), adaptive behavior (Plutchik, 1980),
action tendencies (Frijda, 1986) and motivation (Roseman, 1984) and cognitive appraisals
(Scherer, 1984). For example, “frustration” is elicited by the feeling of blocked and people
want to overcome the obstacle. The emotion of frustration functions is to alert awareness of
obstacles and put effort in to overcome the obstacles by action (Roseman, Wiest, & Swartz,
1994).
Fear, shame, guilty, sad, regret, surprise…..each of the discrete emotion are kind of
independent affect program, they are able to combine with the sequence of event occurrence,
states of affairs and norms of event judgment storing in memory to construct the knowledge of
emotions (Kahneman, & Miller, 1986; Schank & Abelson, 1995; Wyer, Adaval, Colcombe,
2002). These kinds of knowledge could be either episodic or semantic (Robinson, Clore, 2002).
Episodic emotion knowledge is experiential and tightly bound with concrete time and place.
Correspondingly, semantic emotion knowledge is conceptual per se and contexts free (Tulving,
1984). In people’s minds, emotional knowledge constructs various network of association
that combined the causality between events, feelings, cognitive appraisals, motivations,
alternative comparisons, expectations and real outcomes so far so forth. In short, all of
segments we experienced are able to be related, and stored in memory and thereby construct
emotional knowledge. The emotional knowledge is able to be retrieved to interpret the new
situation. Kahneman & Miller (1986) further proposed an insightful theory in terms of Norm
theory. This conceptual framework has several big assumptions that make it possible to take
into account how the formation of judgment is influenced by multiple emotional knowledge.
That conceptual paper contains numerous good theoretical arguments to be examined further.
Some of the basic assumptions were mentioned herein to explain the possibility for that
multiple expected emotions influence on the subjective judgment on value and probability.
The first assumption is that the segmented representations including emotional knowledge
in mind are able to be distributively activated by one event and the set of representations are
rapidly aggregated in forming judgment. The theory also assumes that multiple representations
are elicited at once and the degree to the activation varies. Meanwhile, this theory posits that
emotional interpretation on the event is able to be ad hoc that is dependent on the stimuli’s
characteristics, it is not necessary to emulate the prior emotional experience completely.
Nonetheless, norm theory did not explain the nature of activating multiple-emotional
knowledge.
Are these activated multiple-emotional knowledge disordered in mind or
functionally well organized to form a macro level heurist judgment? Due to the unclear
argument on this issue,. its main theoretical assumptions remained in this particular study in
interpreting the multi-activated emotional knowledge on the subjective judgment.
The nature of activating multiple emotional knowledge is that reality or event itself
contains multi-attributions and our experiences stored in mind corresponding to the similar
event also are multi-facets. Therefore, when an event occurs or display, multiple emotional
knowledge will be activated and evaluate this event separately and finally form a heurist
judgment upon the target. The emotional interpretation on the event may be of motivations,
alternative options, or expectations on the possible outcomes. Some time multiple-emotional
knowledge does not influences subjective judgment at same direction. Some emotion
strengthens; some decreases the estimation of value and probability. But the heuristic judgment
is likely to reflect the optimized aggregation of different emotional knowledge not just relies
on single emotion’s impacts. Each relevant expected emotion on the possible outcomes
therefore functionally contributes to the heurist judgment that makes each emotion a
psychological and ecological wealth to help the formation of judgment from its own
perspective. The above argument is more exploratory and assumed rather than confirmative
and empirical. Via this conceptual argument, we just want to justify that multiple expected
emotions on the possible outcome can combine together to influence the subjective judgment
and each emotion provides unique functional wealth to make the judgment from various
psychological and ecological perspectives. That is the blends of emotional wealth on
subjective judgment.
Blends of Expected Emotion on the Judgment of Subjective Value
Not only does the judgment on the value rely on the absolute monetary amount or relative
monetary amount by a certain reference point, value judgment also contains multi-attributes
(Currim, Sarin, 1984). In the instance of new venture creation, for some people, it is an
opportunity of attaining larger profit (Shane, Venkataraman, 2000), new combination of
knowledge, or ways of learning, as well as creative destruction (Gibb, 2002). For some people,
they perceived risks with possible more monetary lose and felt no interests in creating new
creation. The judgment on value, therefore, includes a motivation element. Studies from
motivations suggest that intrinsic motivation—desire for independence, innovation, personal
achievement—is a significant factor in explaining people’s entry into the entrepreneurship
process (Carter, Gartner, Shaver, & Gatewood, 2003; Rauch & Frese, 2000; Utsch, Rauch,
Rothfuss, & Frese, 1999). In terms of emotion, motivation of creating new venture is likely to
be represented as how people “hope” to start up a new venture. Stronger “hope” indicates
higher motivation of creating new venture.
A number of studies discussed the counterfactual thinking of entrepreneurs (Baron, 1999;
Dimov, 2007). That is people may compare creating new venture to other options and therefore
results in the judgment on the value of new venture creation. Emotional responses to outcomes
are very sensitive to spontaneous comparisons with outcome counterfactuals (e.g., Kahneman
& Miller, 1986; Landman, 1987; Medvec, Madey, & Gilovich, 1995). The counterfactual
comparison may elicit regret when people feel that picking other options are better than
creating new venture. Regret is defined as “a feeling of sadness about something wrong or
about a mistake that you have made, and a wish that it could have been different and better
(Cambridge Dictionary).” For people who are unable to accept possible failures especially for
those who feel that they may not make a right decision on new venture creation, they are kind
of unsure how attractive to start up their own business. Therefore, they perceive lower value of
starting up. Higher regret will lead to deceased desirability of creating new venture.
Regret is an emotion mostly used in money relevant decision making. People feel painful
emotionally (Landman, 1993). It was regarded that people engaged to make a decision by
regret-minimizing rather than risk-minimizing (Zeelenberg, Beattie, Plight, & Vries, 1996). If
this statement is correct, regret should be a stronger moderator on value judgment especially
when decision maker has strong motivation of creating new venture. In other word, the impact
of motivation on value judgment will depend on the level of regret. For the people with lower
expected intensity of regret, the subjective value will increase with the increasing of the
intensity of hope. But for the people with higher expected intensity of regret, the judgment of
subjective value will not be influenced with the increase of the intensity of hope. So, it is
hypothesized that:
Hypothesis 1a: For the lower intensity of regret, the value of creating new venture will
increase with the increasing intensity of hope.
Hypothesis 1b: For the higher intensity of regret, the value of creating new venture will
not be influenced with the increasing intensity of hope.
Meanwhile, decision making researchers also argued that things feel good must be
desirable, the things that feel bad must be undesirable (Damasio, 1994; Pham, 2004; Schwarz
& Clore, 1996; SLovic, Finucane, Peters, & MacGregor, 2002). However, feeling good is kind
of point of view that positive emotions are not generally of difference. Moreover, happiness of
the possible success of new venture creation, as a positive emotional experience, should
positively relate to the value judgment. Therefore, it is hypothesized that,
Hypothesis 2: The intensity of expected happiness of possible success of new venture
creation will be positively related to the subjective judgment on the value of creating new
venture.
Surprise also is an emotion frequently discussed by decision making researchers (c.f.,
Harrison, March, 1984; Kahneman, Miller, 1986; Mellers, etc. 1997;Teigen, Keren, 2002).
Surprise is distinct from other emotions by the appraisals of unexpectedness, novelty or
unfamiliarity (Roseman, Antoniou, & Jose, 1996). It is also assumed to follow from a sharp
increase in stimulation as a consequence of any sudden and unexpected event (Izard, 1991).
Surprise is also able to be perceived by recognizing the significant differences between an
obtained outcome and the individual’s previous experience, or the perceptual or conceptual
distance between the expected and the obtained (Teigen, Keren, 2003). Therefore, the activated
surprise generally is a signal of unready for event occurrences. Moreover, we can infer that the
expected surprise on the possible success of new venture creation might represent the lower
estimation on subjective value of creating new venture. So, I hypothesis that,
Hypothesis 3: the intensity of expected surprise on the possible success of creating new
venture will be negatively related to the subjective judgment on the value of new venture
creation.
Blends of Expected Emotion on the Judgment of Subjective Probability
Being a very active concept in decision making under uncertainty, subjective probability
has broadly been discussed by philosophers, psychologists, statisticians and economists.
Researchers have remaining curiosity in enquiry why people differ in subjective beliefs on the
likelihood of the occurrence of uncertain events.
Intuitive judgment on probability has been systematically examined to violate the calculus
of chance (e.g., Kahneman, Slovic, & Lichtensterin, 1978). More and more, researchers are
aware of that people make judgment on the likelihood of event occurrence by biased cognitive
intuition, like representativeness, availability, or anchoring and adjustment (Kahnema, Slovic,
& Tversky, 1982). Support theory (Tversky, Koehler, 1994; Fox, 1999) emphasized that the
subjective judgment on probability is highly dependent on the ways in which people interpret
the event itself.
People differ in the level of motivation of achievement. Some people are likely to avoid
failure more than to achieve a success (Atkinson, 1957; McClelland, 1951). And self
motivation is found able to enhance perceived self-efficacy or confidence (Bandura, Schunk,
1981; Gigerenzer, Hoffrage, & Kleinbolting, 1991). Therefore, for the people with high
motivation (hope) to fulfill a business opportunity, they are mostly likely to judge the
likelihood of the success in starting up (subjective probability) higher. Thus, it is hypothesized
that,
Hypothesis 4: The intensity of hope is positively related to the judgment of the
subjective probability of starting-up.
On the other hand, subjective probability also reflects individual’s confidence on the
occurrence of a particular event (Savage, 1954). People estimate probabilities differently.
Some are overconfidence; some are underconfidence (Erev, Wallsten, & Budescu, 1994;
Kahneman, Lovallo, 1993; Sieck, Merkle, Zandt, 2007). In some way, expected emotion on the
possible outcome of decision making reflects the extent to self-efficacy and confidences of
individuals. Among discrete emotions, sadness is functionally activated by the loss of valued
object or by lack of efficacy (Malatesta & Wilson, 1988). Therefore, we infer that the
subjective probability estimation of the success of starting up will be lower if individuals
anticipate higher intensity of sadness for the possible failure of starting-up.
Hypothesis 5: The intensity of expected sadness on the possible failure of starting up is
negatively related to the judgment of subjective probability of the success of starting-up.
Surprise is the discrete emotion that has been mostly discussed together with the judgment
of probability (c.f. Brandstatter, Kuhberger, & Schneider, 2002; Kahneman, Miller, 1986;
Teigen, Keren, 2003). But surprise is conceptually distinct from probability, like Kahneman,
and Miller (1986. pp.137) noted: “…probability is always construed as an aspect of
anticipation, whereas surprise is the outcome of what we shall call backward
processing---evaluation after the fact. Probability reflects expectations. Surprise (or its absence)
reflects the failure or success of an attempt to make sense of an experience, rather than an
evaluation of the validity of prior beliefs.” Teigen and Keren (2003) argued that surprise is not
elicited by low probability event. Even same low probability can not elicit same intense
surprise for different individuals. Surprise is activated by individuals’ contrast between their
hypothesis on the outcome and the real outcome. Moreover, higher intensity of expected
surprise on the possible success of starting up indicates a higher contrast with the lower default
expectation on the success of starting—up. So, it is hypothesized that,
Hypothesis 6: Subjective judgment on the probability of the success of starting-up is
negatively related to the intensity of expected surprise on the possible success of
starting-up.
METHODS
Research Design
This study is multivariate within subjects design. After introduction, a decision scenario
(see attachment 1) was present. In this scenario, participants were asked to make a decision on
a binary choice that is comprised of a certain choice and a risky choice with same expected
value, computing by payoff multiplying objective probability. In this decision scenario,
suppose that the participants discovered a business opportunity while working in a firm with
stable salary, they were facing to make a decision between starting up to fulfill the business
opportunity or keeping the work in the firm. The design of the decision scenario took into
accounts three issues: 1) the probability of successful rate of new venture creation. We
designed the objective probability is 33.3% on the basis of the statistic report (Watson, Everett,
1996), which indicated that 70% percent new business failed within the first five years. 2) the
possible income of which a fresh undergraduate student from business faculty may get in local
area (around US$30,000 one year); 3). We designed a same expected value of new venture
creation and the stable income work in the company, one third of probabilities to create new
venture successfully and gain US$90,000 at first year (1/3×90K) if new venture creation
success; another is a certain income with US$30,000 each year (100%×30K).
Then participants were asked to answer a set of questions related to their (1) risk perception
(2) uncertainty of this decision problem, subjective value of the new venture creation (3)
subjective probability of operating the new business opportunity successfully. (4) participants
also were required to rate their intensity of hope to fulfill the business opportunity
(starting—up), and the intensity of positive emotions on the possible success of starting up,
like joy, happiness and surprise, the intensity of negative emotions on the possible failure of
starting-up including irritations, anger, contempt, sadness, shame, fear, and disappointment, as
well as the intensity of counterfactual emotions, for instance, envy, jealousy and regret when
they compared their possible failure of starting up with others who did not take the risk to start
up. (5) Their final decision of the venture. After participants made the final decision, trait
emotions were required to rate as control variables.
Sample and Procedure
Participants were undergraduate students in the Business Faculty at The Chinese
University of Hong Kong. Eight undergraduate classes of business faculty were randomly
selected. The investigation was conducted in class during a teacher evaluation period. After
teaching evaluation, students were informed that they were welcome to undertake a research as
volunteers and the questionnaire to fill out had no bearing on teacher evaluations. After the
introduction of the study, all of the recruits agreed to stay to join the investigation.
The introduction on the first page of the questionnaire highlights that: (1) it is for the
purposes of academic research; (2) the survey is confidential; (3) as for the answers to each
question, there was no wrong and no right. They were not required to write their name on the
questionnaire. All of the questionnaires were completed on site. Among the 217 students,
average age was 20.17 years (SD= 1.24, range from 18 to 26). 38% were female, 62% male.
The mean of expected income after graduation is US$2192.9 per month (range from 1222 to
138888, SD=1694.02). This number is close to our designed year salary 30K.
Students are potential entrepreneurs. In their career, they have to decide to be a self
employer or an employee of a firm after they graduate. Student sample, therefore, was
investigated in this study to address the decision process how entrepreneurs to be decide to
start up their own business. For real entrepreneurs, the new venture creation is an event that
had passed. Investigating entrepreneurs for new venture creation need the established
entrepreneurs retrieve the old experiences from their memories and the bias would happen
possibly from response, memory, underestimation and the other sources (Dowens, & Calvo,
2003; Roy, Christenfeld, McKenzie, 2005). So, student sample is an appropriate sample for
this particular study.
Measurements
All scales were measured on a 6-point scale (1=strongly disagree, 6=strongly agree).
Subjective Value:
Some researchers use desirability to represent subjective value
(Murphy, 1982), some use attractiveness and some researchers interchange attractiveness,
desirability and intensity of preference to represent subjective value. In this study, three items
including attractiveness, desirability and intensity of preference are used together to measure
subjective value of risky options. The Cronbach’s alpha of these three items is 0.86.
Weighting. Weighting is operationalized as the importance or influences of an outcome
(e.g., Murphy, 1982). Participants were asked to rate: “how important is it to create a new
venture for you?” from 1 to 6 (1=not at all 6=very important).
Subjective Possibility. This variable was measured by the question, “please evaluate your
probability to operate the new venture successfully from 1 to 6.” 1 represents no chance, 2
equals to 20% of chances, 5 represents 80% of chances and 6 equals to 100%.
Expected Emotions: Expected emotions are measured by the emotion list of Bosman, &
Winden (2002). These emotions were rated by 6 point likert scale (1=not at all, 6=extremely).
It includes irritation, anger, contempt, envy, jealousy, sadness, joy, happiness, shame, fear, and
surprise. Because some prior decision making theorists emphasized the influences of regret
and disappointment (e.g., Bell, 1982; Loomes, & Sugden, 1982; 1986), regret and
disappointment are added. Bosman, & Winden (2002)’s emotion list is similar to Izard’s 10
fundamental emotions but it includes some counterfactual emotions, for example, envy and
jealousy. So, here we use Bosman, & Winden (2002)’s list meanwhile added regret and
disappointment. But this list combined positive emotions, negative emotions and
counterfactual emotions together, we asked the participants to evaluate their emotions
separately under the three different conditions, like, (1) please rate the intensity of the negative
emotions below once your starting up will fail, irritations, anger, contempt, sadness, shame,
fear, and disappointment. Irritation and anger are considered as same fundamental emotion, so
the scores of the two items were summed up and averaged to get one score denoted as anger. (2)
Please rate your intensity of the positive emotions below once your starting up will succeed,
joy, happiness and surprise. Since joy and happiness always are perceived as same
fundamental emotion, we average the scores of joy and happiness as happiness. (3). Please rate
your intensity of these emotions below when you compare your possible failure of starting up
with others who did not take the risk to start up, envy, jealousy and regret. Trait emotions were
measured by same emotion list but were rated after the participants made the final decision.
They were informed to rate the intensity of these emotions experienced in the recent two weeks.
The scalar is 6-point likert (1=not at all, 6=extremely).
RESULTS
1. Descriptive Statistic
From Table 1, the correlation matrix shows that the negative discrete emotions can be
differentiated from each other because the correlation co-efficiency ranged from 0.04 to 0.57.
None of them is larger than 0.70. And the positive emotion, surprise and happiness also were
significantly related at lower level (R =0.26, p<0.001). The intensity of hope was negatively
related to perceived uncertainty (R=-0.37, p<0.001) but had no relationship with perceived
risks (R=-0.13, ns). For the subjective probability of starting up, it was positively related to
hope (R=0.46, p<0.001), negatively related to fear (R=-0.21, p<0.01), envy (R=-0.21, p<0.01),
regret (R=-0.34, p<0.001) and surprise (R=-0.44, p<0.001) as well.
To the subjective judgment on the value of starting up, the intensity of hope(R=0.69,
p<0.001) to fulfill the business opportunity (starting-up) is positively related. Fear (R=-0.24,
p<0.001), envy (R=-0.17, p<0.05), jealousy (R=-0.24, p<0.001), and regret (R=-0.30, p<0.001)
on the possible failure of starting-up, and surprise (R=-0.31, p<0.001) on the possible success
of starting-up as well, all are negatively related to the subjective judgment on the value of
starting up.
2. The Estimation of Subjective Value Predicted by Emotions
Hierarchical regression was conducted to predict subjective value and subjective
probability by expected emotions separately (Shown in Table 2). As to the hierarchical
regression, in the first step, age, gender and expected income after graduation, these control
variables, were put into the regression; in the second step, trait emotions that experienced
within the two weeks into the regression; in the third step, perceived uncertainty and risk; in
the forth, the intensity of hope, and expected emotions including Contempt, Disappointment,
Fear, Sadness, Shame, Envy, Jealousy, Regret, Anger, Happiness, and Surprise were put into
the regression model. it the last step, the interaction term, hope times regret, was in. The whole
model explained 60% of variances in predicting subject value, 50% of variances in subjective
probability.
From the statistical reports, we found that trait emotions experienced within the couple
of weeks had no significant influences on the estimation of subjective value. But trait sadness
is negatively related to subjective probability (β=-0.28, P<0.05). From the functional
significance of sadness, sadness is activated by the loss of valued object or by lack of efficacy
(Malatesta & Wilson, 1988). Therefore, frequently experienced sadness in terms of trait
sadness represents a lower efficacy. A person lack of self efficacy also is possible to have lower
confidence of running a new business successfully, which reduced their estimation on
subjective probability.
As for perceived uncertainty and risks, perceived uncertainty had significant negative
relationship with subjective value (β=-0.38, P<0.001) and subjective probability (β=-0.34,
P<0.001). These results indicated that perceived uncertainty on creating new venture would
reduce people’s estimation on the attractiveness of starting up and their beliefs on the
likelihood of their successful starting-up.
The intensity of hope of creating new venture is positively related to subjective value
(β=0.54, P<0.001), which means that people’s motivation on new venture increase their
judgment on the value of taking the risk to start up. The intensity of hope to fulfill the business
opportunity also positively related to the judgment on subjective probability (β=0.30, P<0.001)
that supported Hypothesis 4.
In predicting subjective value by expected emotions on the possible success, failure and
counterfactual feelings, surprise was negatively related to subjective value (β=-0.24, P<0.001)
that supported Hypothesis 3. Surprise also negatively related to the judgment of subjective
probability (β=-0.31, P<0.001), it is consistent with Hypothesis 6. Surprise is defined as the
feeling caused by something unexpected happening. It reflects people’s expectation and
readiness of the success of new venture creation. Therefore, higher expectation and readiness
for the possible success will increase their subjective perceived value and likelihood of running
new venture successfully. Inconsistent with Hypothesis 5, the intensity of expected sadness on
the possible failure of starting up has no relationship with the judgment of subjective
probability for the success of starting up. But trait sadness significantly related to subjective
probability. This result indicated that the judgment on subjective probability was more related
to trait self efficacy or confidence. Distinct from trait sadness, the expected sadness elicited by
the possible failure of starting up may be just task specific. So, people who anticipated higher
intensity of sadness on the possible failure of starting up may not experience same level
sadness frequently. That also means that people who anticipate higher intensity of sadness on a
specific event may not be lack of self-efficacy and confidence to take a risk. But trait sadness
does.
An interesting result was found in examining Hypothesis 2. The intensity of expected
happiness of possible success of new venture creation was supposed to be positively related to
the subjective value of creating new venture. At Table 1, we found that the correlation
co-efficiency between subjective value and expected happiness on the possible success of
starting-up significantly correlated (R=0.25, P<0.001). But the results of regression showed
that the beta of happiness in predicting subjective value was not significant (β=0.13, ns).
Statistically, this result indicated that the association between happiness and subjective value
judgment might be explained or replaced by other variables. And the most similar variable in
the regression equation is hope. In order to examine whether the variances of happiness
explained in predicting subjective value actually are part of hope’s function, additional post
hoc incremental analysis was conducted shown in Table 3. First, happiness entered the
regression equation. Second, hope entered. The results showed that happiness (β=0.25,
P<0.001) was significantly related to subjective value only on the condition of which hope was
not in the equation and the standardized beta is the same as the part correlation between
happiness and subjective value (Rpart=0.25). When hope entered into the equation, the part
correlation between happiness and subjective value dropped to 0.09 and the beta is
insignificant in predicting subjective value (β=0.13, ns). These results showed that the
relationship between happiness and subjective value was spurious. Between them does not
exist causal relationship. The spurious correlation was replaced by the motivation of starting
up. In other word, the conventional belief of which feeling good means desirable is spurious.
Instead, higher motivation cause to higher judgment on value.
The expected regret on the possible failure when the individuals compare their failure with
those not taking the risk was found to be significant in predicting subjective probability
(β=-0.19, P<0.05). That means when people anticipate their regret once the decision they made
will turn out wrong has negative influences on the subjective judgment on the likelihood of the
success of starting up. But trait regret has no influence on this judgment.
The interaction term, hope by regret, was significant (β=-0.18, P<0.01) in predicting
subjective value. The interaction was plotted shown in Figure 2-1. For the lower expected
regret on the possible failure of starting up in comparison to the alternative option staying at
the firm, the simple slope of hope in predicting value judgment was significant (Slope=0.74,
t=14.82, P<0.001) it meant when the intensity of hope increased one unit, the subjective value
judgment would correspondingly increase 0.74 unit. This result supported Hypothesis 1a. For
the higher regret, the subjective judgment on the value of starting-up also was significantly
increased with the increase of the intensity of hope. But inconsistent to the Hypothesis 1b, the
slope (0.42, t=6.06, P<0.001) is not zero. When the intensity of hope increased one unit, the
subjective judgment on value increased 0.42 unit, which indicated that on value judgment,
people were not regret-minimizing although regret negatively influenced value judgment, yet
motivation still have strong influence on value judgment, stronger in particular for the people
with lower regret.
3: Common Methods Variance
Since all of the variables in this study were self-reported, Harman’s single- factor test
(Harman, 1967; Podsakoff, MacKenzie, Lee, Podsakoff, 2003) was conducted to examine
whether the data from same rating source resulted in common method bias. There was no
single factor identified by unrotated exploratory factor analysis (EFA). It demonstrated that the
common method variances were not big enough to impair the current findings regarding the
relationships among variables appearing in the regression equation.
DISCUSSION
1. Multiple expected emotions influence the value and probability judgment on starting up.
The value of starting up contains multi-attributions that are gauged by people’s multiple
psychological feelings. Specifically, the value judgment of starting-up is influenced by the
motivation to fulfill the business opportunity, the intensity of regret elicited by counterfactual
comparison, as well as the surprise anchoring the expectation state of the individual on the
possible outcome..
For the subjective probability, people make judgment on the likelihood of the success of
starting up not only relying on how they hope to create new venture, but also the expected
status (surprise), counterfactual comparisons, and other discrete expected emotions for
instance anger, contempt and shame. The reason why expected anger, contempt and shame can
influence on the probability judgment of starting up still is unclear in this study. Further
conceptual and empirical work need done to clarify the association between the emotional
function and probability judgment.
2.
Motivation plays important role in subjective judgment.
This study found that the expected happiness on the possible success of starting-up did not
exist causal relationship in predicting value judgment. The effect of expected happiness was
spurious when motivation was controlled for. Therefore, the conventional belief regarding the
outcome with positive feelings is desirable needs to re-conceptualized. Actually each discrete
emotion differs in function, readiness and action. Generally speaking “feeling good” devalued
the emotional function in predicting judgment. In this particular case, the explanation from
hedonic driving is replaced by the function of motivation of achieving the success of
starting-up.
3.
Trait emotions and task specific expected emotions on subjective judgment.
One interesting result from this study is that some judgment is task specific like value
judgment; No trait emotions were found here to influence value judgment. Task specific
expected emotions explained most of the variances of the value judgment. However,
probability judgment was found to be influenced by trait emotions, in particular, the intensity
of frequently experienced sadness, which means that general self-efficacy or self-confidence in
some extent influences the probability judgment.
4. Multi-emotions restrict each other in value judgment
The moderating effect of regret on the association between hope and value judgment shows
that the single emotion’s influence on the value judgment depends on the level of another
variable, which also implies that there are higher level function beyond or underneath the
emotional effects that coordinate the interactions between emotions. What are they and how
they play functional influences as a theoretical question arise on the basis of this finding.
Meanwhile, the moderating effect also shows that people are not regret-minimizing on value
judgment although regret is an important variable in predicting value and probability
judgment.
In practice, people’s willingness to undertake a business opportunity highly depends on
their judgment on the value and the probability of success of starting up. From the predictive
perspective, people with lower self-efficicay incline to underestimate the successful
probability of new venture creation; higher motivation like hope to realize the business
opportunity would overestimate the probability. The variation of probability judgment is most
likely to be influenced by the ways how individuals interprete it by their own feelings. No
matter from which perspective, surprise as a signal of unreadiness will devalue the new venture
and underestimate the probability. And motivation plays an important role in both value and
probability judgment.
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Table 1: Correlation Matrix
1
2
3
1
-.03 1
.08 -.03 1
4
5
6
7
1.Age
2Gender
3.Expected
Income
4.Subjective Value -.06 -.12 .02 1
-.00 -.09 .09 .56*** 1
5.Subjective
Probability
.06 .11 .17* -.43***-.39*** 1
6. Uncertainty
.07 -.16* -.06 -.17* -.17* .17*
1
7. Risk
-.06 -.04 .10 .69*** .46*** -.37*** -.13
8. Hope
.01 -.06 .21** -.11 .08
-.00
-.00
9. Contempt
-.05
.23***
10.Disappointment-.20**-.05* -.06 .21** .03
-.00 -.06 .01 -.24***-.21** .21**
.30***
11. Fear
-.19**-.01 .03 -.04 -.11
.10
.29***
12. Sadness
-.09
-.02
.10
-.03
-.01
.04
.20**
13. Shame
-.07 -.11 -.08 -.17* -.21** -.03
.26***
14. Envy
.09
.16*
-.06 -.04 -.02 -.24***-.13
15. Jealousy
.01 -.04 -.16* -.30***-.34*** .17*
.38***
16. Regret
-.08 .03 .07 -.08 -.12
-.03
.06
17. Anger
-.13 -.22**-.07 .25*** .05
-.06
30***
18. Happiness
.08 .02 -.06 -.31***-.44*** .18**
.37***
19. Surprise
20.08 .46 2.19K3.43 3.36 3.81
4.22
Mean
0.86
1.75 .98 1.69K1.00 1.01 0.77
SD
Note: Gender is dummy coded (0—female; 1---male)
* P<0.05 **P<0.01 ***P<0.001
8
9
10
11
12
13
14
15
16
17 18
19
.
1
-.10 1
.23*** -.09 1
-.08 .28***.23***1
.04 .16* .50***.33***1
-.00 .11 .39***.30***.34***1
.18** .16* .19** .31***.19** .25***1
-.27***.28***.02 .18* .20** .24***.57***1
-.21** .04 .30***.35***.33***.33***.39***.40***1
-.04 .46***.23***.29***.26***.25***.25***.38***.22***1
.24*** -.14* .51***.17* .27***.17* .22***.06 .27***.09 1
-.14* .11 .15* .39***.17* .02 .29***.09 .36***.15*.26*** 1
3.64 2.08 4.66 3.19 4.14 3.33 3.27 2..80 3.98 2.925.07 3.63
1.25 1.26 1.24 1.51 1.37 1.47 1.47 1.35 1.55 1.231.12 1.43
Table 2: Hierarchical Regressions: Predictions on Subjective Value, Subjective
Probability and Situational Anxiety
Model
1
2
3
4
5
Subjective Value
Stander β
Subjective Probability
Stander β
-.07
-.13
.09
0.03
.00
-.09
.17*
0.04
-.01
-.09
.07
-.07
.05
.06
-.02
.05
-.07
-.04
0.03
0.06
.11
.03
.09
-.28**
.02
-.12
.06
.10
-.15
-.09
0.14
0.18**
-.38***
-.13
0.15
0.21***
-.34***
-.06
0.11
0.29***
.54***
.08
.11
-.11
-.05
.00
.03
-.05
-.13*
-.07
.13
-.24***
0.43
0.64***
.30***
.16*
.11
-.01
-.01
.14*
-.04
.14
-.19**
-.18*
.07
-.31***
0.25
0.54***
-.18**
0.03**
0.67**
60%
-.019
0.01
0.55
50%
Control Variables
Gender
Age
Expected Income
R Square
Trait Emotions
Contempt
Shame
Disappointment
Sadness
Regret
Envy
Jealousy
Hope
Anxiety
Anger
R Square Changes
R Square
Uncertainty &Risk
Uncertainty
Risk
R Square Changes
R Square
Expected Emotions
Hope
Contempt
Disappointment
Fear
Sadness
Shame
Envy
Jealousy
Regret
Anger
Happiness
Surprise
R Square Changes
R Square
Interaction Terms
Hope ×Regret
R Square Changes
R Square
Total Variances Explained
Table 3: Testing the Spurious Correlation between Happiness and the Judgment
of Subjective Value
Models
Standardized Beta
Part Correlation
Step 1:
Happiness
0.25***
0.25
Step 2:
Happiness
0.09
0.09
Hope
0.67***
0.65
Figure 2-1: The Moderating Effect of Regret on the Relationship between Hope
and Subjective Value
Subjective Value
The interaction between Hope and Regret
Low Regr et
low
high
Hi gh
Regr et
Hope
Slopelow=0.74 (t=14.82, p<0.001)
Slopehigh=0.41 (t=6.06, p<0.001)