L8: emotions and economic decision making: Drouvelis and Grosskopf (2016)

Question 1

What did Drouvelis and Grosskopf (2016) examine?

Answer 1

How induced emotions affect decision making in a setting where personal and group interests are misaligned

Question 2

Explain the design of Drouvelis and Grosskopf (2016)?

Answer 2

1-shot interaction PGG with and without punishment, mood induction is used prior to the game:
- group account multiplier is s.t. individual dominant strategy is contribute 0 to group account BUT social optimum is for all E to contribute all

2nd stage added) participants can assign negative points (costly punishment for both, 1:3 “cost-to-impact” ratio) to other members

Question 3

Explain the mood induction stage of Drouvelis and Grosskopf (2016)?

Answer 3

1) -“Positive emotions” treatment, inducing happiness: video from Mr. Bean’s holiday showing protagonist street dancing in order to earn some money is shown
2) “Negative emotions” treatment, inducing anger: A video from My Bodyguard showing a boy who comes to a new school and gets harassed by a bully is shown

13 emotions of subjects then measured on scale 1-9, game is then played

Question 4

Hypotheses of Drouvelis and Grosskopf (2016) regarding contribution behaviour?

Answer 4

• H0: mood manipulation will have no effect on contribution levels
• H1: subjects more selfish when in an angry mood tf lower contributions levels

Question 5

Hypotheses of Drouvelis and Grosskopf (2016) regarding punishment behaviour?

Answer 5

HYPOTHESES: punishment behaviour
H0: punishment function doesn’t depend on different moods
H1: punishment expected to be harsher when anger induced tf punishment function steeper in ‘-ve’ than ‘+ve’ emotions treatments

Question 6

Additional treatment added (not that important)?

Answer 6

, treatments also where the punishment stage is announced at start (‘With Announcement’) and where it is announced after the PGG is played (‘Without Announcement’); allows them to isolate effect induced emotions have on contributions (controls for announcement of punishment stage)

Question 7

4 findings of Drouvelis and Grosskopf (2016)?

Answer 7

1) Greater anger in -ve Tr., greater happiness in +ve Tr.
2) Contributions significantly higher for positive emotions than negative (both with and wo. announcement)
3) Induced anger -> less pro-social attitudes of agents
4) On avg, total efficiency (as measured by average net earnings) is also lower for angry subjects compared to the happy ones.