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In an experimental setting, we study the role of emotions in markets. Our experimental market is modeled on those of Smith, Suchanek, and Williams (1988) and Caginalp, Porter, and Smith (2001). Participants take part in a laboratory market in which they trade a risky asset over a computer network. Prior to trading, they watch short videos that are exciting and upbeat—chase scenes; neutral—segments from a historical documentary; fearful—scenes from a horror movie; or sad—scenes from a drama. Larger asset pricing bubbles develop in experimental markets run subsequent to the exciting videos relative to the other three conditions. The differences in the magnitude and amplitude of the bubbles are both economic and statistically significant. A follow-up study indicates that the phenomenon may be explained by excited people’s greater inclination to extrapolate past positive market trends into future asset prices.

Anecdotal evidence suggests that in a gambling environment consumers may end up betting more than they had initially planned. We assess this phenomenon using sequential and fair gambles in a two-stage process (planned and actual bets). The results show that in the planning phase, people behave conservatively, betting on average less after an anticipated loss and the same amount after an anticipated gain. However, after an actual loss in the first gamble is experienced, individuals bet in a subsequent gamble significantly more than what they had initially planned, whereas on average no differences from the plan are perceived after a gain. We show that the reason for such asymmetry is in part due to people's tendency to underestimate, at the planning phase of the gamble, the impact of negative emotions in betting decisions during the actual phase of the gamble.

One's own emotions may influence others' behavior in a given social interaction. If one believes this, s/he has an incentive to game emotions - to strategically conceal a current emotion or display a non-experienced emotion - in an attempt to influence her/his counterpart. In a series of three experiments, we show that people deliberately conceal (experiment 1) or misrepresent (experiments 2 and 3) their emotional state in a negotiation setting. When given the opportunity to either hide or express their current emotions before playing an ultimatum game, receivers who have reported low (vs. high) level of anger are more likely to conceal their emotion right before the proposers decide on the division of the pie (experiment 1). When the procedure allows participants to change their previously reported emotion, receivers choose to inflate their reported level of anger prior to proposers' decision (experiment 2). Finally, this emotion gaming hypothesis generalizes to positive emotions as well. In a standard trust game, trustees inflate the level of happiness before trusters decide on passing vs. keeping a fixed amount of money to the trustees (experiment 3).

Other people's incidental feelings can influence one's decision in a strategic manner. In a sequential game where a proposer moves first by dividing a given pot of cash (to keep 50% [vs. 75%] of the pot) and a receiver responds by choosing the size of the pot (from $0 to $1), the proposer is more likely to make an unfair offer (i.e., to keep 75% of the pot) to a receiver who watched a funny sitcom (vs. “angry” movie clip) in an unrelated study prior to the game playing. However, when the receiver knows that the proposer has the affective information, and the proposer is aware of this knowledge, the effect dissipates. In other words, a proposer expects a happy (vs. angry) receiver to be more accommodating or cooperative as long as the happy receiver does not realize that the proposer is trying to benefit from receiver's current incidental feelings.

How can the hedonistic assumption (i.e., people's willingness to pursue pleasure and avoid pain) be reconciled with people choosing to expose themselves to experiences known to elicit negative feelings? We assess how (1) the intensity of the negative feelings, (2) positive feelings in the aftermath, and (3) the coactivation of positive and negative feelings contribute to our understanding of such behavior. In a series of 4 studies, consumers with either approach or avoidance tendencies (toward horror movies) were asked to report their positive and/or negative feelings either after (experiment 1) or while (experiments 2, 3A, and 3B) they were exposed to a horror movie. We demonstrate how a model incorporating coactivation principles and enriched with a protective frame moderator (via detachment) can provide a more parsimonious and viable description of the affective reactions that result from counter-hedonic behavior.

The proposed model integrates two streams of research on affect by specifying how evaluative and regulatory mechanisms interact to guide behavior. Two experiments demonstrate that when no mood-changes are expected, the affective evaluation mechanism guides behavior, leading to a monotonic increase in behavioral intentions as affect conditions shift from negative to positive. When participants expect the behavioral activity to change their current affective states, a combination of affect regulation and affective evaluation produces a U shape pattern when a mood-lifting cue is present (experiment 1) and an inverted U shape pattern when a mood-threatening cue is present (experiment 2).

Objective: The present study aimed to (i) assess the appetitive drives evoked by the visual cues of ultra-processed food and drink products and (ii) investigate whether text warnings reduce appetitive drives and consumers' reported intentions to eat or drink ultra-processed products.Design: In Study I, a well-established psychometric tool was applied to estimate the appetitive drives associated with ultra-processed products using sixty-four image representations. Sixteen product types with four exemplars of a given product were included. Pictures from the International Affective Picture System (IAPS) served as controls. The two exemplars of each product type rated as more appetitive were selected for investigation in the second study. Study II assessed the impact of textual warnings on the appetitive drive towards these thirty-two exemplars. Each participant was exposed to two picture exemplars of the same product type preceded by a text warning or a control text. After viewing each displayed picture, the participants reported their emotional reactions and their intention to consume the product.Setting: Controlled classroom experiments SUBJECTS: Undergraduate students (Study I: n 215, 135 women; Study II: n 98, 52 women).Results: In Study I, the pictures of ultra-processed products prompted an appetitive motivation associated with the products' nutritional content. In Study II, text warnings were effective in reducing the intention to consume and the appetitive drive evoked by ultra-processed products.Conclusions: This research provides initial evidence favouring the use of text warnings as a public policy tool to curb the powerful influence of highly appetitive ultra-processed food cues. [ABSTRACT FROM AUTHOR]

Research into the authenticity of facial emotion expressions often focuses on the physical properties of the face while paying little attention to the role of beliefs in emotion perception. Further, the literature most often investigates how people express a predetermined emotion rather than what facial emotion expressions people strategically choose to express. To fill these gaps, this paper proposes a non-verbal zero-sum game -- the Face X Game -- to assess the role of contextual beliefs and strategic displays of facial emotion expression in interpersonal interactions. This new research paradigm was used in a series of three studies, where two participants are asked to play the role of the sender (individual expressing emotional information on his/her face) or the observer (individual interpreting the meaning of that expression). Study 1 examines the outcome of the game with reference to the sex of the pair, where senders won more frequently when the pair was comprised of at least one female. Study 2 examines the strategic display of facial emotion expressions. The outcome of the game was again contingent upon the sex of the pair. Among female pairs, senders won the game more frequently, replicating the pattern of results from study 1. We also demonstrate that senders who strategically express an emotion incongruent with the valence of the event (e.g., smile after seeing a negative event) are able to mislead observers, who tend to hold a congruent belief about the meaning of the emotion expression. If sending an incongruent signal helps to explain why female senders win more frequently, it logically follows that female observers were more prone to hold a congruent, and therefore inaccurate, belief. This prospect implies that while female senders are willing and/or capable of displaying fake smiles, paired-female observers are not taking this into account. Study 3 investigates the role of contextual factors by manipulating female observers' beliefs. When prompted to think in an incongruent manner, these observers significantly improve their performance in the game. These findings emphasize the role that contextual factors play in emotion perception--observers' beliefs do indeed affect their judgments of facial emotion expressions. [ABSTRACT FROM AUTHOR]