The effect of partner-directed emotion in social exchange decision-making

Despite the prevalence of studies examining economic decision-making as a purely rational phenomenon, common sense suggests that emotions affect our decision-making particularly in a social context. To explore the influence of emotions on economic decision-making, we manipulated opponent-directed emotions prior to engaging participants in two social exchange decision-making games (the Trust Game and the Prisoner's Dilemma). Participants played both games with three different (fictional) partners and their tendency to defect was measured. Prior to playing each game, participants exchanged handwritten “essays” with their partners, and subsequently exchanged evaluations of each essay. The essays and evaluations, read by the participant, were designed to induce either anger, sympathy, or a neutral emotional response toward the confederate with whom they would then play the social exchange games. Galvanic skin conductance level (SCL) showed enhanced physiological arousal during anger induction compared to both the neutral and sympathy conditions. In both social exchange games, participants were most likely to defect against their partner after anger induction and least likely to defect after sympathy induction, with the neutral condition eliciting intermediate defection rates. This pattern was found to be strongest in participants exhibiting low cognitive control (as measured by a Go/no-Go task). The findings indicate that emotions felt toward another individual alter how one chooses to interact with them, and that this influence depends both on the specific emotion induced and the cognitive control of the individual

Evolution of emotions on networks leads to the evolution of cooperation in social dilemmas

We show that the resolution of social dilemmas in random graphs and scale-free networks is facilitated by imitating not the strategy of better-performing players but, rather, their emotions. We assume sympathy and envy to be the two emotions that determine the strategy of each player in any given interaction, and we define them as the probabilities of cooperating with players having a lower and a higher payoff, respectively. Starting with a population where all possible combinations of the two emotions are available, the evolutionary process leads to a spontaneous fixation to a single emotional profile that is eventually adopted by all players. However, this emotional profile depends not only on the payoffs but also on the heterogeneity of the interaction network. Homogeneous networks, such as lattices and regular random graphs, lead to fixations that are characterized by high sympathy and high envy, while heterogeneous networks lead to low or modest sympathy but also low envy. Our results thus suggest that public emotions and the propensity to cooperate at large depend, and are in fact determined by, the properties of the interaction network

Third-party punishment and social norms

We examine the characteristics and relative strength of third-party sanctions in a series of experiments. We hypothesize that egalitarian distribution norms and cooperation norms apply in our experiments, and that third parties, whose economic payoff is unaffected by the norm violation, may be willing to enforce these norms although the enforcement is costly for them. Almost two-thirds of the third parties indeed punished the violation of the distribution norm and their punishment increased the more the norm was violated. Likewise, up to roughly 60% of the third parties punished violations of the cooperation norm. Thus, our results show that the notion of strong reciprocity extends to the sanctioning behavior of ‘‘unaffected’’ third parties. In addition, these experiments suggest that thirdparty punishment games are powerful tools for studying the characteristics and the content of social norms. Further experiments indicate that second parties, whose economic payoff is reduced by the norm violation, punish the violation much more strongly than do third parties.Social norm; Sanction; Punishment; Strong reciprocity; Social preference; Third party

The role of social cognition in decision making

Successful decision making in a social setting depends on our ability to understand the intentions, emotions and beliefs of others. The mirror system allows us to understand other people's motor actions and action intentions. ‘Empathy’ allows us to understand and share emotions and sensations with others. ‘Theory of mind’ allows us to understand more abstract concepts such as beliefs or wishes in others. In all these cases, evidence has accumulated that we use the specific neural networks engaged in processing mental states in ourselves to understand the same mental states in others. However, the magnitude of the brain activity in these shared networks is modulated by contextual appraisal of the situation or the other person. An important feature of decision making in a social setting concerns the interaction of reason and emotion. We consider four domains where such interactions occur: our sense of fairness, altruistic punishment, trust and framing effects. In these cases, social motivations and emotions compete with each other, while higher-level control processes modulate the interactions of these low-level biases

The Emotional Consequences of Pro-social Behavior in Markets

Pro-social behavior made when buying private goods is becoming increasingly popular. Several findings from behavioral and experimental economics however emphasizes that people are less pro-social in such situations, compared to pro-social decisions in non-market contexts. This paper suggests that emotional responses are important explanations of this finding. It is first argued that the emotional response to a pro-social decision combined with private good purchase is different from the response to a similar decision in a non-market situation. Through evidence from a laboratory experiment, it is then found, that deciding on a social choice in a market exchange involves a less positive emotional reaction to others, compared to non-market situations. Moreover, subjects in market contexts are found to be less responsive to other subjects’ contribution behavior, relative to the non-market contexts.Emotions; market exchange; pro-social behavior

Moral Judgments in Social Dilemmas: How Bad is Free Riding?

In the last thirty years, economists and other social scientists have investigated people’s normative views on distributive justice. Here we study people’s normative views in social dilemmas, which underlie many situations of economic and social significance. Using insights from moral philosophy and psychology we provide an analysis of the morality of free riding. We use experimental survey methods to investigate people’s moral judgments empirically. We vary others’ contributions, the framing (“give-some” vs. “take-some”) and whether contributions are simultaneous or sequential. We find that moral judgments of a free rider depend strongly on others’ behaviour; and that failing to give is condemned more strongly than withdrawing all support.moral judgments, moral psychology, framing effects, public goods experiments, free riding

Moral Judgments in Social Dilemmas: How Bad is Free Riding?

In the last thirty years, economists and other social scientists have investigated people’s normative views on distributive justice. Here we study people’s normative views in social dilemmas, which underlie many situations of economic and social significance. Using insights from moral philosophy and psychology we provide an analysis of the morality of free riding. We use experimental survey methods to investigate people’s moral judgments empirically. We vary others’ contributions, the framing (“give-some” vs. “take-some”) and whether contributions are simultaneous or sequential. We find that moral judgments of a free rider depend strongly on others’ behaviour; and that failing to give is condemned more strongly than withdrawing all support.moral judgments, moral psychology, framing effects, public goods experiments, free riding