The Effects of Induced Mood on Bidding in Random N-th Price Auctions
In this paper we study whether mood affects: 1) Willingness to pay (WTP); and 2) The effectiveness of the demand revealing mechanism. We study decisions using a random nth price auction with induced values and homegrown values. Our data show no clear support for negative mood effects on WTP and, under some conditions, they show weak support for positive mood effects on WTP. However, mood does affect the effectiveness of the value elicitation mechanism in revealing value. Under a good mood, subjects submit bids that are significantly higher than their induced values.
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