Capital budgeting is very important to firms. Interpersonal relationships are characteristic of many capital budgeting contexts,and theses relationships can lead to emotional affective reactions. Drawing on relevant work in neurobiology and psychology,we predict that these affective reactions can influence individual’s capital budgeting decisions,and that the influence of these affective reactions on team’s capital budgeting decision is not notable. In this paper,we research the impact of affect on capital budgeting decisions through an experiment. The results of experiment demonstrate that individual will tend to avoid decision alternatives that elicit negative emotional affects,and that the influence of affect on team’s capital budgeting decision is not notable.
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