BE 8: Emotions

Neoclassical economics puzzle: Emotions are un-measurable

Effect of emotions is unpredictable (self-control/ projection bias/ social preferences) + therefore unmodelable

1 of 25

Decision making under emotions: Model

.

2 of 25

Decision making under emotions: Effort costs

.

3 of 25

Decision making under emotions: Model (simplified)

.

4 of 25

Decision making under emotions: Model predictions (1)

Willpower depletion or unrelated cognitive demands increases make it less likely that the individuals chooses Deliberative optimum (vice versa)

5 of 25

Decision making under emotions: Model predictions (2)

If intensity for affective motivation increases (temporal/ non-temporal factors) affective preference for Affective optimum over Deliberative optimum, then affective intensity makes it less likely to choose deliberative optimum (vice versa)

6 of 25

Model applications: emotions & intertemporal choice: model

.

7 of 25

Model applications: emotions & intertemporal choice: model (simplified)

.

8 of 25

Model applications: emotions & intertemporal choice: predictions (1)

Increasing the cost function = more myopic behaviour (present bias)

9 of 25

Model applications: emotions & intertemporal choice: predictions (2)

Any factor that increases intensity of affective motivation for immediate payoff = more myopic behaviour

10 of 25

Model applications: emotions & intertemporal choice empirics: time preference + mood (experiment)

ST mood manipulation through comedy clip/ asked questions about (mood/ time preference for indifference in $X/ demographic + psychological characteristics)

11 of 25

Model applications: emotions & intertemporal choice empirics: time preference + mood (results)

Watching a comedy clid increases your NPV (discounting less) (predictions (1)) / Other expl: happiness makes you care less about money (prediction 2) / happiness makes you less risk averse about receiving money in future

12 of 25

Model applications: emotions & intertemporal choice empirics: time preference + mood (ISSUES)

Reverse causality (people that have LT goals are happier) = Mood manipulation (ST comedy clip) = People dont tell truth = Pick one individual to actually receive $X

13 of 25

Model applications: emotions & risk decisions (P.T): model

.

14 of 25

Model applications: emotions & risk decisions (P.T): predictions (1)

Increase cost function = magnifies Prospect Theory (Loss Aversion/ Non-Linear decision weights)

15 of 25

Model applications: emotions & risk decisions (P.T): predictions (2)

Lotteries with same good (money) + affective motivation intensity: increase in affective intensity = magnifies Prospect Theory

16 of 25

Model applications: emotions & risk decisions (P.T) empirics: Sexual arousal & willpower depletion

When treated with sexual arousal = higher willingness to engage in **** behaviour/ risky behaviour (prediction 1)/ Other expl: sexual arousal may affect 1) Beliefs 2) Present bias 3) Honesty

17 of 25

Model applications: emotions & social preferences: model

.

18 of 25

Model applications: emotions & social preferences: model (simplified)

.

19 of 25

Model applications: emotions & social preferences: Predictions (1)

Increase cost function = increases your care for others when affective motivation is high (vice versa)

20 of 25

Model applications: emotions & social preferences: Predictions (2)

Any factor increasing affective motivation = increases your care for others (factor their utility into your utility much more)

21 of 25

Model applications: emotions & social preferences empirics: NFL defeats + IPV (relation to the model)

.

22 of 25

Model applications: emotions & social preferences empirics: NFL defeats + IPV (regression)

.

23 of 25

Model applications: emotions & social preferences empirics: NFL defeats + IPV (results)

1) Upset losses = +ve coef (sig) 2) close losses = +ve coef (n.s) 3) upset win = 0

24 of 25

Model applications: emotions & social preferences empirics: NFL defeats + IPV (ISSUES)

Selection = excuse to engage in IPV if watching NFL team loss = control for predicted outcomes

25 of 25

Get Revising

BE 8: Emotions

Other cards in this set

Card 2

Front

Back

Card 3

Front

Back

Card 4

Front

Back

Card 5

Front

Back

Comments

Similar Economics resources: