Knowledge and emotions are linked

"Wow!"

"Uh oh!"

"Hmm."

Surprise, curiosity, and interest are the three knowledge emotions. Understanding the link between knowledge and emotions is important because this link drives are decision processes and learning. The issues of behavioral finance are associated with modes of thought and emotions. We cannot divorce knowledge and learning from emotions. We are not computers and this is one of the advantages to our thinking. Accepting these differences will help us understand when our knowledge acquisition goes astray.  

This focus on the importance of the knowledge emotions is from New: Understanding of Need for Novelty and Change by  Winifred Gallagher. When we face something new, our first reaction may be surprise. This is the wow moment. A second reaction may be curiosity that this new thing is somehow different from what is normal or should be expected from our usual thought. This will be a moment of either attraction or revulsion. Finally, there is a true interest or a desire to understand what is new. The process of understanding knowledge is emotional and critically linked together.

This patterns is often on display when there is a surprise announcement in the markets. There is the wow effect. This is a surprise. We are then curious about the surprise and then there is an interest to better understand the details. The market reacts with emotions to wow moments.