Researchers at Princeton University are using brain-imaging technology to study which parts of the brain -- the ones that control emotion or the ones that control rational thought -- essentially "light up" when we're trying to make economic decisions.
They've concluded that when our emotions emerge victorious over our rational abilities, we often make choices that go against our self-interest.
Anyone with any street smarts intuitively knows this to be true. It's called shooting yourself in the foot. Nonetheless, such research is getting attention not only from psychologists, but also from the field of economics, which traditionally has ignored emotion and has assumed that people make rational decisions.
Again, real estate agents have known this for a long time. "I've had occasions where I've had to say to my clients, 'Wait a minute. You told me you had five priorities in selecting a house to buy, and this place has none of them. And yet you tell me this is the one?' " said agent Colette Cachey of North Side in Chicago.
"Sometimes people want to buy a place, and they just don't know why. I had a couple who were expecting a baby, and they bought a four-story walk-up condo. They said they guessed the light and space drew them," Cachey said.
"I want to take psych classes instead of business classes for my continuing education," Cachey added.
Connecticut broker Adorna Carroll, who conducts seminars on negotiation strategies nationwide, says that emotions tend to show up most dramatically when it comes time to dicker over the contract. For reasons that have nothing to do with rational thought, deals just get stuck there, she says. In her seminars, she offers four ways to move the talk along when it seems to be going nowhere:
* Reestablish common ground on a personal level with the other negotiator. She suggests softening the approach and complimenting the other negotiator's strengths.
* Bring in "new" information, such as, "Since we last spoke, our loan has received pre-approval rather than just prequalification." This allows the conversation to reopen.
* Change the negotiator. This may mean bringing in a partner, or even going up the ladder to the real estate office's owner or manager -- someone with no emotional baggage in the deal.
* Change the venue. When negotiators are incredibly invested in the issue, a change of venue -- breakfast, dinner, drinks -- can dramatically modify the tension.
One thing Carroll has noticed is timing. If talks are going to get stuck, it usually will happen at night, she said.
"People come home from work, and they're tired. They just don't make rational decisions when it's evening."