Pronunciation: uh-fekt bye-us
Affect bias is the tendency to let emotions influence judgments about risk and reward. Positive feelings make people perceive low risk and high return, while negative emotions inflate perceived danger or loss.
A man in Hyderabad had a very pleasant experience at a new café that offered great service and a warm atmosphere. A week later, when he was considering investing a small amount through a crowdfunding platform, he noticed that the same café was raising funds for expansion. Without checking the café’s financials, business risks, rental agreements, or long-term viability, he immediately felt it was a good investment. His positive emotions from the earlier visit made him assume the business would perform well, even though he had no data to support that belief. His decision was influenced almost entirely by the good feelings he associated with the place rather than an objective evaluation of its prospects.
Term popularized by Slovic, Finucane, Peters, and MacGregor (early 2000s). Affect bias ties directly into heuristics and emotional shortcuts in risky decision-making.