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Tuesday, February 25, 2020
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Eugenio ProtoWolfsonTitle: Anger and Strategic Behavior: A Level-K Analysis Abstract: Anger is an important driver in shaping economic activities. In particular, in instances that involve strategic interactions between individuals. The literature has emphasised how anger can serve as an efficient commitment device in situations of conflict. A possible mechanism acts through limiting the capacity of strategic thinking. Accordingly, with a preregistered experiment (experiment 1) – where we externally induce anger to a subgroup of subjects following a standard procedure – we show that anger can impair the capacity of thinking strategically in a beauty contest game, where angry subjects choose numbers further away from the Nash equilibrium and earn significantly less. Furthermore, we show with a second preregistered experiment (experiment 2) that this effect is not common to all negative emotions: sad subjects do not play significantly further away from the Nash equilibrium than the control group in the same beauty contest game of experiment 1. We verify the effectiveness of the anger induction also by using a novel method of text analysis. |