L8: emotions and economic decision making

Question 1

What did Xiao and Houser (2005) examine?

Answer 1

Responders’ behaviour in treatments where emotions’ expression was prohibited compared with treatments where emotions’ expression was allowed (using Ultimatum Game)

Question 2

What was the aim of Xiao and Houser (2005)?

Answer 2

To see how constraints on emotional expression affected punishment behaviour

Question 3

Explain the game used by Xiao and Houser (2005) and the two treatments?

Answer 3

Standard UG, 1-period game:

• No emotional expression: standard UG using $20
• Emotional expressin: same as NEE except responder can write a message to the proposer (costless) when they accept/reject the offer

Question 4

Why can’t the messages in Xiao and Houser (2005) have strategic implications?

Answer 4

1 period game, are sent AFTER the proposers make their proposal

Question 5

Hypothesis of Xiao and Houser (2005)?

Answer 5

Responders will be more likely to accept unfair offers when they can convey their emotions to proposers

Question 6

How were the messages evaluated in Xiao and Houser (2005)?

Answer 6

10 objective & hypothesis-blind evaluators were given the anonymous messages and asked to evaluate them (positive, negative or neutral emotions)
They received $5 for showing up, $5 for completing task and to increase attentiveness, 3 messages were randomly chosen as ‘payoff’ messages; if their eval. matched that of most popular eval. for that message they got $5 extra.

Question 7

4 main findings of Xiao and Houser (2005)?

Answer 7

1) 87% wrote messages in treatment that allowed it
2) Out of those who received LESS than 20% of the endowment, 79% of them wrote negative emotion messages
3) When offered >=50% of E, 81% wrote positive emotins messages
4th finding) rejection rates higher in NEE treatment vs EE treatment

Question 8

3 main conclusions of Xiao and Houser (2005)?

Answer 8

• Negative emotions often triggered by unfair treatment
• Findings highlight importance humans attach to expressing emotions
• When constraints on emotional expressions are present, people resort to costly methods to convey negative feelings

Question 9

3 possible explanations that rejection rates are lower when subjects can send messages?

Answer 9

• Responders may FEEL BETTER after conveying emotions
• Sending messages of anger may be an ALTERNATIVE PUNISHMENT FORM
• R’s may believe accepting a low offer may mean the P interprets they accept an inferior position, tf messages can deny this interpretation so they accept and send negative message.