Animal Spirits
Version 1.0.0 · Updated 2026-07-30
CORE DEFINITION
Refers to the irrational psychological forces that drive human economic behavior (such as investment and consumption), including confidence, fear, herding, and perceptions of fairness. Economic fluctuations often occur not because fundamentals have changed, but because "animal spirits" have changed.
SCAFFOLDING EFFECT
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Confidence management. As a leader, one of your core tasks is to manage "animal spirits." In times of crisis, rational data analysis is often less effective than a passionate and confident speech, because the economy is driven by emotions.
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Keynes's "animal spirits" refers to the idea that economic decisions are not purely rational calculations but are deeply influenced by irrational psychological drives: confidence, fear, herding, perceptions of fairness, etc. These emotions can be self-reinforcing, causing economic fluctuations to often stem from changes in expectations and narratives rather than substantive changes in fundamentals.
MINIMUM ACTION
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Animal_spiritsverified
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