Emotions and foreign direct investment: a theoretical and empirical exploration

Emotions are largely absent in economic models. However, many theories still cease to explain the actual situations. We combine regular microeconomic theory with emotions. We will focus on an FDI decision of a firm, including both business-economics and emotional variables in the firms decision-making process.Theoretically, emotions are included in a utility maximization model, by not only considering the utility of the firm but also the utility of the decision-maker. Empirically, the presence of emotions in FDI decision-making is tested using a sample of Dutch enterprises that considered an investment in Central or Eastern Europe between 1990 and 2000.