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Emotions and Economic Shocks in a First-Price Auction

Author

Listed:
  • Ronald Bosman

    (De Nederlandsche Bank)

  • Arno Riedl

    (Faculty of Economics and Econometrics, University of Amsterdam)

Abstract

We investigate experimentally whether emotions affect bidding behavior in a firstprice auction. To induce emotions, we confront subjects after a first auction series with apositive or negative random economic shock. We then explore the relation between emotions andbidding behavior in a second auction series. Our main results are: (i) the economic shock has asubstantial impact on the experienced emotions of bidders; (ii) the emotional statesystematically influences bidding behavior. In particular, negative emotions induce morecompetitive bidding. Our findings show that for a good understanding of bidder behavior theemotions have to be taken into account.

Suggested Citation

  • Ronald Bosman & Arno Riedl, 2003. "Emotions and Economic Shocks in a First-Price Auction," Tinbergen Institute Discussion Papers 03-056/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030056
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    References listed on IDEAS

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    Cited by:

    1. Kirchsteiger, Georg & Rigotti, Luca & Rustichini, Aldo, 2006. "Your morals might be your moods," Journal of Economic Behavior & Organization, Elsevier, vol. 59(2), pages 155-172, February.
    2. Ma, Marshall Xiaoyin & Noussair, Charles N. & Renneboog, Luc, 2022. "Colors, Emotions, and the Auction Value of Paintings," European Economic Review, Elsevier, vol. 142(C).
    3. Egbert, Henrik & Mengov, George, 2009. "Satisfaction and Disappointment in Consumer Choices," MPRA Paper 55595, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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