Drichoutis, Andreas and Nayga, Rodolfo and Klonaris, Stathis (2010): The Effects of Induced Mood on Preference Reversals and Bidding Behavior in Experimental Auctions.
This is the latest version of this item.
Download (258Kb) | Preview
This article contributes to the research agenda of accommodating psychological insights in conventional lab experiments. We specifically test whether inducing subjects into different mood states has a significant effect on subjects’ rationality (in the form of preference reversals) and on bidding behavior in homegrown value auctions. We find that mood states can significantly affect the rate of preference reversal and bidding behavior in experimental auction valuation. Specifically we find that subjects exhibit more rational behavior under a positive mood state than under a negative mood state. Subjects in a positive mood provide lower bid values than others. Regardless of mood states, males tend to have a higher rate of preference reversal than females in mixed gender sessions. However, females tend to commit a higher rate of preference reversal in female only sessions than in mixed sessions while males tend to commit a lower rate of preference reversal when in male only sessions than in mixed sessions.
|Item Type:||MPRA Paper|
|Original Title:||The Effects of Induced Mood on Preference Reversals and Bidding Behavior in Experimental Auctions|
|Keywords:||mood; affect; rationality; Vickrey auction; preference reversals; gender differences|
|Subjects:||C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior|
|Depositing User:||Andreas Drichoutis|
|Date Deposited:||25. May 2011 06:58|
|Last Modified:||15. Feb 2013 21:17|
Andersen, S., G. W. Harrison, M. I. Lau, and E. E. Rutstrom. "Eliciting risk and time preferences." Econometrica 76 (3), 2008.583-618.
Barger, P. B., and A. A. Grandey. "Service with a smile and encounter satisfaction: Emotional contagion and appraisal mechanisms." Academy of Management Journal 49, 2006.1229–1238.
Baron, J. "Purposes and methods." Behavioral and Brain Sciences 24 (3), 2001.403.
Barone, M. J., P. W. Miniard, and J. B. Romeo. "The influence of positive mood on brand extension evaluations." The Journal of Consumer Research 26 (4), 2000.386-400.
Batra, R., and D. M. Stayman. "The role of mood in advertising effectiveness." The Journal of Consumer Research 17 (2), 1990.203-214.
Bono, J. E., and R. Ilies. "Charisma, positive emotions and mood contagion." The Leadership Quarterly 17 (4), 2006.317-334.
Booth, A. L., and P. J. Nolen. "Choosing to compete: How different are girls and boys?" CEPR Discussion Paper No. 7214, March, 2009a.
———. "Gender differences in risk behaviour: Does nurture matter?" CEPR Discussion Paper No. 7198, March, 2009b. Bosman, R., M. Sutter, and F. van Winden. "The impact of real effort and emotions in the power-to-take game." Journal of Economic Psychology 26 (3), 2005.407-429.
Bosman, R., and F. van Winden. "Emotional hazard in a power-to-take experiment." The Economic Journal 112 (476), 2002.146-169.
Bruni, L., and R. Sugden. "The road not taken: How psychology was removed from economics, and how it might be brought back." The Economic Journal 117 (January), 2007.1-28.
Capra, C. M. "Mood-driven behavior in strategic interactions." The American Economic Review 94 (2), 2004.367-372.
Capra, C. M., K. Lanier, and S. Meer. "The effects of induced mood on bidding in random nth-price auctions." Journal of Economic Behavior & Organization (In press), 2010.
Clark, L. A., and D. Watson. Distinguishing functional from dysfunctional affective responses. In The nature of emotion: Fundamental questions, edited by P. Ekman and R. J. Davidson. New York: Oxford University Press. 1994.
Cox, J. C., and D. M. Grether. "The preference reversal phenomenon: response mode, markets and incentives." Economic Theory 7, 1996.C381-C405.
Cubitt, R. P., A. Munro, and C. Starmer. "Testing explanations of preference reversal." The Economic Journal 114 (497), 2004.709-726.
Curren, M. T., and K. R. Harich. "Consumers' mood states: The mitigating influence of personal relevance on product evaluations." Psychology & Marketing 11 (2), 1994.91-107.
Curtis, M. B. "Are audit-related ethical decisions dependent upon mood?" Journal of Business Ethics 68 (2), 2006.191-209.
de Ruyter, K., and J. Bloemer. "Customer loyalty in extended service settings. The interaction between satisfaction, value attainment and positive mood." International Journal of Service Industry Management 10 (3), 1998.320-336.
de Vries, M., R. W. Holland, and C. L. M. Witteman. "In the winning mood: Affect in the Iowa Gambling Task." Judgment and Decision Making 3 (1), 2008.42-50.
Dowling, M., and B. M. Lucey. "Mood and UK equity pricing." Applied Financial Economics Letters 4 (4), 2008a.233 - 240.
———. "Robust global mood influences in equity pricing." Journal of Multinational Financial Management 18 (2), 2008b.145-164.
Drichoutis, A. C., R. M. Nayga, Jr., and P. Lazaridis. "The role of training in experimental auctions." American Journal of Agricultural Economics (forthcoming), 2010.
Drichoutis, A. C. and R. M. Nayga, Jr. "Eliciting risk and time preferences under induced mood states." Working paper, (2010).
Elster, J. "Emotions and economic theory." Journal of Economic Literature 36 (1), 1998.47-74.
Englich, B., and K. Soder. "Moody experts --- How mood and expertise influence judgmental anchoring." Judgment and Decision Making 4 (1), 2009.41-50.
Fedorikhin, A., and V. M. Patrick. "Positive mood and resistance to temptation: The interfering influence of elevated arousal." The Journal of Consumer Research (forthcoming), 2010.
Fischbacher, U. "z-Tree: Zurich Toolbox for Ready-made Economic Experiments." Experimental Economics 10 (2), 2007.171-178.
Gardner, M. P. "Mood states and consumer behavior: A critical review." The Journal of Consumer Research 12 (3), 1985.281-300.
Gardner, M. P., and R. P. Hill. "Consumers' mood states: Antecedents and consequences of experiential versus informational strategies for brand choice." Psychology & Marketing 5 (2), 1988.169-182.
———. "Consumers' mood states and the decision-making process." Marketing Letters 1 (3), 1989.229-238.
Gneezy, U., K. L. Leonard, and J. A. List. "Gender differences in competition: Evidence from a matrilineal and a patriarchal society." Econometrica 77 (5), 2009.1637-1664.
Gneezy, U, M Niederle, and A Rustichini (2003) Performance in competitive environments: Gender differences. The Quarterly Journal of Economics 118 (3), 1049-1074.
Gneezy, U, and A Rustichini (2004) Gender and competition at a young age. The American Economic Review 94 (2), 377-381.
Grable, J. E., and M. J. Roszkowski. "The influence of mood on the willingness to take financial risks." Journal of Risk Research 11 (7), 2008.905-923.
Grether, D. M., and C. R. Plott. "Economic theory of choice and the preference reversal phenomenon." American Economic Review 69 (4), 1979.623-638.
Grund, C., and D. Sliwka. "Envy and compassion in tournaments." Journal of Economics & Management Strategy 14 (1), 2005.187-207.
Gunnarsson, S., J. F. Shogren, and T. L. Cherry. "Are preferences for skewness fixed or fungible?" Economics Letters 80 (1), 2003.113-121.
Harrison, G. W. "Experimental evidence on alternative environmental valuation methods." Environmental & Resource Economics 36, 2006.125-162.
Harrison, G. W., R. M. Harstad, and E. E. Rutström. "Experimental methods and elicitation of values." Experimental Economics 7 (2), 2004.123-140.
Harrison, G. W., E. Johnson, M. M. McInnes, and E. E. Rutstrom. Measurement with experimental controls. In Measurement in economics: A handbook, edited by M. Boumans. San Diego, California: Elsevier Inc. 2007.
Harrison, G. W., M. I. Lau, and E. E. Rutström. "Risk attitudes, randomization to treatment, and self-selection into experiments." Journal of Economic Behavior & Organization 70 (3), 2009.498-507.
Harrison, G. W., and J. A. List. "Field experiments." Journal of Economic Literature 42 (4), 2004.1009-1055.
Hertwig, R., and A. Ortmann. "Experimental practices in economics: A methodological challenge for psychologists?" Behavioral and Brain Sciences 24 (3), 2001.383-403.
Hill, R. P., and J. C. Ward. "Mood manipulation in marketing research: An examination of potential confounding effects." Journal of Marketing Research 26 (1), 1989.97-104.
Izard, C. E. The psychology of emotions. New York: Plenum Press. 1991.
Johnson, E. J., M. Steffel, and D. G. Goldstein. "Making better decisions: From measuring to constructing preferences." Health Psychology 24 (4), 2005.S17–S22.
Jordan, P. J., and S. A. Lawrence. "The impact of negative mood on team performance." Journal of Management & Organization 12 (2), 2006.131-145.
Kamstra, M. J., L. A. Kramer, and M. D. Levi. "Losing sleep at the market: The daylight saving anomaly." The American Economic Review 90 (4), 2000.1005-1011.
Karni, E., T. Salmon, and B. Sopher. "Individual sense of fairness: An experimental study." Experimental Economics 11 (2), 2008.174-189.
Kirchsteiger, G., L. Rigotti, and A. Rustichini. "Your morals might be your moods." Journal of Economic Behavior & Organization 59 (2), 2006.155-172.
Kliger, D., and O. Levy. "Mood and Judgment of Subjective Probabilities: Evidence from the U.S. Index Option Market." European Finance Review 7 (2), 2003.235-248.
Knowles, P. A., S. J. Grove, and W. Burroughs. "An experimental examination of mood effects on retrieval and evaluation of advertisement and brand information." Journal of the Academy of Marketing Science 21 (2), 1993.135-142.
Larsen, R. J. "Toward a science of mood regulation." Psychological Inquiry 11 (3), 2000.129-141.
Lawson, R. The effects of mood on retrieving consumer product information. In Advances in Consumer Research, edited by E. C. Hirschman and M. B. Holbrook. Provo, UT: Association for Consumer Research. 1985.
Lee, A. Y., and B. Sternthal. "The effects of positive mood on memory." The Journal of Consumer Research 26 (2), 1999.115-127.
Lerner, J. S., D. A. Small, and G. Loewenstein. "Heart strings and purse strings: Carryover effects of emotions on economic decisions." Psychological Science 15 (5), 2004.337-341.
Lichtenstein, S., and P. Slovic. The construction of preference. Cambridge, UK: Cambridge University Press. 2006.
Lusk, J. L., and M. Rousu. Market price endogeneity and accuracy of value elicitation mechanisms. In Using experimental methods in environmental and resource economics, edited by J. A. List: Edward Elgar. 2006.
Meloy, M. G. "Mood-driven distortion of product information." The Journal of Consumer Research 27 (3), 2000.345-359.
Meloy, M. G., E. J. Russo, and E. Gelfand Miller. "Monetary incentives and mood." Journal of Marketing Research 43 (2), 2006.
Miner, A. G., and T. M. Glomb. "State mood, task performance, and behavior at work: A within-persons approach." Organizational Behavior and Human Decision Processes 112 (1), 2010.43-57.
Niederle, M, and L Vesterlund (2007) Do women shy away from competition? Do men compete too much? The Quarterly Journal of Economics 122 (3), 1067-1101.
Niederle, M., and L. Vesterlund. "Do women shy away from competition? Do men compete too much?" Quarterly Journal of Economics 122 (3), 2007.1067-1101.
Park, J., S. J. Lennon, and L. Stoel. "On-line product presentation: Effects on mood, perceived risk, and purchase intention." Psychology & Marketing 22 (9), 2005.695-719.
Payne, J. W., J. R. Bettman, and D. A. Schkade. "Measuring constructed preferences: Towards a building code." Journal of Risk and Uncertainty 19 (1), 1999.243-270.
Pelled, L. H., and K. R. Xin. "Down and out: An investigation of the relationship between mood and employee withdrawal behavior." Journal of Management 25 (7), 1999.875-895.
Pocheptsova, A., and N. Novemsky. "When do incidental mood effects last? Lay beliefs versus actual effects." The Journal of Consumer Research 36 (6), 2010.992-1001.
Pugh, D. S. "Service with a smile: Emotional contagion in the service encounter." Academy of Management Journal 44 (5), 2001.1018-1027.
Qiu, C., and C. W. M. Yeung. "Mood and comparative judgment: Does mood influence everything and finally nothing?" The Journal of Consumer Research 34 (5), 2008.657-669.
Rabin, M. "Psychology and economics." Journal of Economic Literature 36 (1), 1998.11-46.
———. "A Perspective on Psychology and Economics." European Economic Review 46, 2002.657-685.
Raghunathan, R., and J. R. Irwin. "Walking the hedonic product treadmill: Default contrast and mood-based assimilation in judgments of predicted happiness with a target product." The Journal of Consumer Research 28 (3), 2001.355-368.
Reuben, E., and F. van Winden. "Social ties and coordination on negative reciprocity: The role of affect." Journal of Public Economics 92 (1-2), 2008.34-53.
Roehm, H. J., and M. L. Roehm. "Revisiting the effect of positive mood on variety seeking." The Journal of Consumer Research 32 (2), 2005.330-336.
Rutström, E. E. "Home-grown values and incentive compatible auction design." International Journal of Game Theory 27, 1998.427-441.
Saunders, E. M. J. "Stock prices and Wall Street weather." The American Economic Review 83 (5), 1993.1337-1345.
Sayegh, L, WP Anthony, and PL Perrewe (2004) Managerial decision-making under crisis: The role of emotion in an intuitive decision process. Human Resource Management Review 14 (2), 179-199.
Schmidt, U., C. Starmer, and R. Sugden. "Third-generation prospect theory." Journal of Risk and Uncertainty 36 (3), 2008.203-223.
Seidl, C. "Preference reversal." Journal of Economic Surveys 16 (5), 2002.621-655.
Shogren, J. F., S. Cho, C. Koo, J. A. List, C. Park, P. Polo, and R. Wilhelmi. "Auction mechanisms and the measurement of WTP and WTA." Resource and Energy Economics 23 (2), 2001.97-109.
Shogren, J. F., M. Margolis, C. Koo, and J. A. List. "A random nth-price auction." Journal of Economic Behavior and Organization 46 (4), 2001.409-421.
Sirakaya, E., J. Petrick, and H.-S. Choi. "The role of mood on tourism product evaluations." Annals of Tourism Research 31 (3), 2004.517-539.
Slovic, P. "The construction of preference." American Psychologist 50 (5), 1995.364-371.
Slovic, P., and S. Lichtenstein. "Relative importance of probabilities and payoffs in risk taking." Journal of Experimental Psychology 78 (3, Part 2), 1968.1-18.
Spies, K., F. Hesse, and K. Loesch. "Store atmosphere,mood and purchasing behavior." International Journal of Research in Marketing 14, 1997.1-17.
Swinyard, W. R. "The effects of mood, involvement, and quality of store experience on shopping intentions." The Journal of Consumer Research 20 (2), 1993.271-280.
———. "The effects of salesperson mood, shopper behavior, and store type on customer service." Journal of Retailing and Consumer Services 10 (6), 2003.323-333.
Vickrey, W. "Counterspeculation, auctions, and competitive sealed tenders." Journal of Finance 16 (1), 1961.8-37.
Walser, S., and C. Eckel. "The effect of mood on risk and trust preferences: An experimental study." Working paper Department of Economics, University of Texas at Dallas, 2010.
Watson, D. "The vicissitudes of mood measurement: Effects of varying descriptors, time frames, and response formats on measures of Positive and Negative Affect." Journal of Personality and Social Psychology 55 (1), 1988.128-141.
Watson, D., and J. Vaidya. Mood measurement: Current status and future directions. In Handbook of Psychology, Volume 2: Research Methods in Psychology, edited by J. A. Schinka and W. F. Velicer. New york: Wiley. 2003.
White, C. J. "Towards an understanding of the relationship between mood, emotions, service quality and customer loyalty intentions." The Service Industries Journal 26 (8), 2006.837-847.
Available Versions of this Item
The Effects of Induced Mood on Preference Reversals and Bidding Behavior in Experimental Auction Valuation. (deposited 05. Oct 2010 14:01)
- The Effects of Induced Mood on Preference Reversals and Bidding Behavior in Experimental Auctions. (deposited 25. May 2011 06:58) [Currently Displayed]