emotions in a repeated cournot game - a
TRANSCRIPT
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Emotions in a repeatedCournot game
A psychophysiological experiment
Ilkka Leppanen and Raimo P. HamalainenSystems Analysis Laboratory
Aalto University
July 14, 2014
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Why study emotions in OR?
I To understand behavior in decision andnegotiation support
I Are some processes or models emotionallybetter/worse; or more acceptable/stimulatingthan others?
I To understand the impact of different ways ofcommunication
I Take into account the role of emotions indeveloping modeling and decision supportapproaches
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Do emotions play a role in cooperation?I It is known that subjects cooperate in repeated
interactions; two explanations:I Reputation seeking: entirely self-regardingI Reciprocal fairness: other-regarding (Sobel,
2005, Bowles and Gintis, 2011)I Standard methods in experimental economics cannot
distinguish other-regarding behavior fromself-regarding behavior in repeated interactions (Fehr,2009)
Measuring emotions can reveal whethercooperation is other-regarding orself-regarding
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EmotionsI Changes in bodily states , triggered by the
brainI Responses to actual or recalled perceptionsI Operate alongside cognitionI Not necessarily observable from outside
I Can be studied byI Neurophysiology (brain imaging)I Self-reportsI Psychophysiological methods
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ArousalI A bodily response that prepares the subject
to act (Bechara and Damasio, 2005)I Activation of the autonomic nervous system
leading to a condition of sensoryalertness, mobility and readiness torespond
I Arousal occurs when a subject experiencesas well as anticipates situations
We measure by the skin conductanceresponse (SCR)
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Emotional expressionsI Have both functional and communication rolesI Can accompany both real and abstract stimuli
We measure by facial surface electromyography (EMG)
Anger Disgust Positive affect
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Muscles related to emotional expressions
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Earlier research on emotions in gamesI Ultimatum games:
I Chapman et al. (2009): the responder’s disgustis higher for unfair offers than for fair offers
I Public goods games:I Joffily et al. (2011): arousal is higher when the
subject does not cooperate and when thesubject learns that he has cooperated less thanothers
I Other:I Ben-Shakhar et al. (2007): arousal is related to
punishments in a power-to-take gameI Cannon et al. (2011): anger, disgust, and
positive affect predict moral judgements
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Our experiment: repeated Cournot game
”Example of human conflict between cooperation anddefection” (Fouraker and Siegel, 1963)
I Step 1: indicate your ideal resultI Step 2: choose your production quantityI Step 3: view resultsI Repeated for 20 rounds, duration not known
by the players
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Payoff matrixPayoff increases as the other’s production quantity decreases, and vice versa
J = joint-optimum (72,72), N = Cournot-Nash equilibrium (64,64)
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Experimental arrangement
Pilot subject demonstratingthe equipment
I 44 subjects (24 female)I Mean age 26.05I One pair at a timeI Complete anonymityI Mean reward 22.26 eur
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Scoring and analysis of the signals
I Arousal : integrated SCR (Benedek andKaernbach, 2010) over a 5 s time windowwhen the subject sees the results
I Anticipatory arousal : sum of SCRamplitudes over a varying-length timewindow during decision making, divided bythe length of the time window
I Anger , disgust , positive affect : meanEMG amplitude over a 5 s time windowwhen the subject sees the results
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Explanatory variablesI Fair result : own payoff at least as high as the other’s
payoffI Payoff share : own payoff divided by the sum of own and
the other’s payoffI Own ideal payoff difference : own payoff minus own ideal
payoffI Other’s ideal payoff difference : the other’s payoff minus
ideal payoff to the otherI Own choice : if high, the subject is not cooperativeI Other’s previous round choice : if high, the other is not
cooperativeI GenderI Round of play
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Cournot game: not much cooperation
Only two pairs out of 22 cooperate for more thantwo consecutive rounds
I Mean payoff 55.24, lower than the Cournotequilibrium payoff (64)
I Less cooperation than in similar Cournotduopoly experiments of Huck et al. (2001)and Potters and Suetens (2013)
I Possibly explained by complete anonymity inthe experiment
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Arousal higher in fair than in unfair results
unfair fair
0.0
0.5
1.0
1.5
2.0
p=0.0017ar
ousa
l (lo
g uS
)
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0.00
0.04
0.08
payoff share
arou
sal (
log
uS)
low equal high
0.00
0.04
0.08
payoff share
arou
sal (
log
uS)
low equal high
0.0
0.1
0.2
0.3
0.4
payoff share
arou
sal (
log
uS)
low equal high
0.00
0.02
0.04
payoff share
arou
sal (
log
uS)
low equal high
0.0
0.2
0.4
0.6
payoff sharear
ousa
l (lo
g uS
)
low equal high
0.0
0.2
0.4
payoff share
arou
sal (
log
uS)
low equal high
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0.0
0.5
1.0
1.5
payoff sharear
ousa
l (lo
g uS
)
low equal high
0.0
0.5
1.0
1.5
own ideal payoff difference
arou
sal (
log
uS)
less ideal more
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0.00
0.01
0.02
0.03
0.04
0.05
own choicean
ticip
ator
y ar
ousa
l (uS
)
more cooperative
less cooperative
0.00
0.01
0.02
0.03
0.04
0.05
other´s previous round choice
antic
ipat
ory
arou
sal (
uS)
more cooperative
less cooperative
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Arousal and anticipatory arousal
I Arousal is high in fair results and withhigh payoff share, but also when own payoffis less than the ideal payoff
I Anticipatory arousal is high when thesubject makes less cooperative decisions
I Anticipatory arousal is high when the other’sprevious round decisions are morecooperative
I Gender effect: higher for malesI Habituation: decrease in time
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Disgust and pos. affect are higher in fairresults
unfair fair
0.5
1.5
2.5
3.5
p=0.31
ange
r (lo
g uV
)
unfair fair
12
34
p=0.074
disg
ust (
log
uV)
unfair fair
0.5
1.0
1.5
2.0
2.5
3.0
p=0.078
pos.
affe
ct (
log
uV)
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0.5
1.0
1.5
2.0
2.5
3.0
payoff sharean
ger
(log
uV)
low equal high
0.5
1.0
1.5
2.0
2.5
3.0
own ideal payoff diff.
ange
r (lo
g uV
)
less ideal more
0.5
1.0
1.5
2.0
2.5
3.0
other´s ideal payoff diff.
ange
r (lo
g uV
)less ideal more
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AngerI Increases as payoff share increases
I i.e. the higher the relative payoff, themore there is anger
I Positive and negative affect (anger) arenot mutually exclusive: the corrugatorsupercilii muscle can measure both (Itoet al. 1998)
I Increases as the subject gets less payoffthan the ideal, and as the other gets morepayoff than the ideal
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0.5
1.0
1.5
2.0
2.5
other´s ideal payoff diff.
disg
ust (
log
uV)
less ideal more
0.5
1.0
1.5
2.0
2.5
other´s ideal payoff diff.
posi
tive
affe
ct (
log
uV)
less ideal more
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Disgust and positive affect
I Do not depend on payoff shareI There is possibly correlation between
disgust and positive affectI Disgust and positive affect are higher in
fair resultsI Disgust and positive affect are higher
when the other gets less payoff than theideal
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Relationship to earlier studies
I Anticipatory arousal : similar results as inJoffily et al. (2011) who find that lesscooperative decisions elicit higheranticipatory arousal
I Disgust in unfair results: we find oppositeresults than Chapman et al. (Science, 2009)I They measure disgust, not positive affectI We do not deceive subjects and use fake
opponents as they do, and therefore ourexperiment is more reliable
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ConclusionsI Fair behavior of the other player elicits arousalI Anticipatory arousal is related to own noncooperative
behaviorI Subjects get angry if they get less than their ideal
payoffs, and when the other gets more than their idealpayoffs
I These results imply that subjects are not entirelyself-regarding in cooperative situations
I Emotions should receive more interest in ORI The psychophysiological measurement method suits
well for studying emotions in group decision making
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References
I Bechara, A., and Damasio, A.R. 2005. The somatic marker hypothesis: A neuraltheory of economic decision. Games and Economic Behavior 52(2)
I Benedek, M., and Kaernbach, C. 2010. Decomposition of Skin ConductanceData by Means of Nonnegative Deconvolution. Psychophysiology 47.
I Ben-Shakhar, G., Bornstein, G., Hopfensitz, A., and van Winden, F. 2007.Reciprocity and Emotions in Bargaining Using Physiological and Self-ReportMeasures. Journal of Economic Psychology 28(3)
I Bowles, S., and Gintis, H. 2011. A Cooperative Species. Human Reciprocity andits Evolution. Princeton, NJ: Princeton University Press.
I Cannon, P.R., Schnall, S., and White, M. 2011. Transgressions and Expressions:Affective Facial Muscle Activity Predicts Moral Judgments. Social Psychologicaland Personality Science 2(3)
I Chapman, H.A., Kim, D.A., Susskind, J.M., and Anderson, A.K. 2009. In BadTaste: Evidence for the Oral Origins of Moral Disgust. Science 323
I Huck, S., Muller, W., and Normann, H-T. 2001. Stackelberg Beats Cournot: OnCollusion and Efficiency in Experimental Markets. The Economic Journal 111
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References
I Fehr, E. 2009. Measuring Social Preferences, in Glimcher, P.W., Camerer C.F.,Fehr, E., and Poldrack, R.A. (eds.), Neuroeconomics: Decision Making and theBrain, London, UK: Academic Press
I Fouraker, L. and Siegel, S. 1963. Bargaining Behavior, New York: McGraw-HillI Ito, T. A., Cacioppo, J. T., and Lang, P. J., 1998. Eliciting affect using the
International Affective Picture System: Bivariate evaluation and ambivalence.Personality and Social Psychology Bulletin 24.
I Joffily, M., Masclet, D., Noussair, C.N., Villeval, M-C. 2011. Emotions, Sanctionsand Cooperation. IZA Discussion Paper No. 5592
I Potters, J., and Suetens, S. 2013. Oligpoly Experiments in the CurrentMillennium. Journal of Economic Surveys 27(3)
I Sobel, J. 2005. Interdependent Preferences and Reciprocity. Journal ofEconomic Literature 43(2)