Anger and Strategic Behavior: A Level-K Analysis
Adam Smith Business School, Professor of Applied Economics and Econometrics
Anger is an important driver in shaping economic activities involving strategic interactions between individuals. Literature emphasised how anger serves as an efficient commitment device in situations of conflict. However, anger is a state of mind and angry individuals do not seem to be able to distinguish and selectively react against the source of their anger, hence angry individuals may think less strategically in all interactions. With a first preregistered experiment – 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 farer to the Nash equilibrium and earn significantly less. Furthermore, we show with a second preregistered experiment that this effect is not common to all negative emotions: sad subjects do not play farer to Nash equilibrium in the same beauty contest game.
Université Montpellier - Faculté d'économie - Salle 416
Avenue Raymond Dugrand 34960 Montpellier
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