Enhancing Sustainable Decision Making: The Impact of Emotional Valence, Arousal, and Personality on Risk Recognition During Contract Review

The capacity to identify risks during the pre-contract phase is crucial for effective contract management. Among the various factors that can influence this ability, emotions play a significant role in determining the risk recognition capabilities of individuals. This study aims to investigate the complex interplay between emotional states, personality traits, learning styles, and risk recognition during contract review with physiological and psychological responses. Firstly, a theoretical framework that delineates the relationship among the demographic and emotional factors and risk recognition performance during contract review is proposed. Secondly, an experiment is conducted to record the physiological and psychological responses. Finally, a hierarchical regression model is employed. The results indicated that emotional valence and arousal significantly influence risk recognition performance (p < 0.001), while individual factors such as personality traits and risk propensity indirectly affect risk recognition performance through the mediating role of emotions (p < 0.01). The research contributes to the existing literature by elucidating the indirect pathways through which individual characteristics influence risk perception. These insights can inform sustainable risk management strategies, helping organizations and individuals make more informed and effective decisions in contract management.