“Emotion has taken the center stage in decision theory, and with it emotion regulation promises to play an increasingly prominent role in psychology, economics and cognitive neuroscience”. This quotation from Heilman, Crisan, Houser, Miclea and Miu (2010) alludes to the rising interest in the investigation of emotional processing in economics in the last few years and to the recognition of the importance of the connection between emotions, physiology and behavior in economic decision-making. But what is the relation of emotions to economics? Gross and Thompson (2006) state that “emotions arise when an individual attends to a situation and sees it as relevant to his or her goals”. Beside this definition of emotion there exist many other definitions, for example that “emotions reflect the status of one’s ongoing adjustment to constantly changing environmental demands” (Thayer & Lane, 2009) which is relevant in economics. Emotions can impair decision-making and can lead to irrational decisions which are not regarded in common prospect theory (Kahneman & Tversky, 1979).
Emotions are regulated by humans in different ways. Two main emotion regulation strategies are pointed out by Gross and John (2003): cognitive reappraisal and expressive suppression which intervene in the emotion generative process at different points of time. The emotion regulation depends on an individual’s ability to adjust physiological arousal on a momentary basis (Appelhans & Luecken, 2006). This is reflected by the resting heart rate variability (HRV) as an objective measure for individual differences in regulated emotional responding. HRV is considered a measure of heart-brain interactions and the flexible dynamic regulation of the autonomic nervous system (McCraty & Childre, 2010) as well as a sensitive indicator of inhibitory control mechanisms relevant for decision-making (Sütterlin, Herbert, Schmitt, Kübler & Vögele, 2011a). Because of their influence in economics it is important to better understand cognitive processes and that can be achieved by physiological measurements of HRV which give an objective insight in the emotional processing of individuals. Physiological parameters like skin conductance and heart rate are related to economic decision-making. Studies have already shown that physiological arousal can be a predictor for decision-making behavior (Adam, Gamer, Hey, Ketter & Weinhardt, 2009). [...]
Table of Contents
1 Introduction
2 Emotion regulation
2.1 Basic principles by Gross
2.1.1 Emotion regulation strategies
2.1.2 Effects and consequences
2.1.3 Psychophysiological measures
2.2 Heart rate variability (HRV)
2.2.1 Emotions and heart rhythm patterns
2.2.2 Physiological basics of HRV
2.2.3 HRV analysis
2.3 Existing experimental studies in economics
2.3.1 The Ultimatum Game
2.3.2 The Framing Effect
2.3.3 Decision-making under risk and uncertainty
2.3.4 Auctions and financial market
2.3.5 Overview
3 Experimental results
3.1 Experiments
3.1.1 All experiments
3.1.2 Regret experiment
3.1.3 Emotion induction experiment
3.1.4 Human versus computer experiment
3.2 Discussion
4 Conclusion and outlook
Objectives and Research Themes
The primary objective of this thesis is to investigate the influence of different emotion regulation strategies and the resulting emotional state on bidding behavior in first-price sealed bid auctions. By integrating physiological measurements, specifically heart rate variability (HRV), the research aims to establish an objective link between an individual's autonomic nervous system function and their economic decision-making processes.
- Analysis of emotion regulation strategies (reappraisal vs. suppression) in economic contexts.
- Application of HRV as a physiological biomarker for inhibitory control and emotional regulation capacity.
- Empirical examination of three distinct experimental auction setups to observe bidding behavior.
- Evaluation of the correlation between risk attitudes and physiological indicators in financial decision-making.
Excerpt from the Thesis
2.1.1 Emotion regulation strategies
To understand what happens when somebody controls his emotions it is very helpful to take a closer look at the processes of emotion regulation proposed by Gross. He states that we use different strategies to influence “which emotions we have, when we have them, and how these emotions are experienced or expressed” (Gross, 1998b). This can be reached by decreasing, maintaining or increasing one or more positive or negative aspects of emotion (Gross, 2010). The different strategies take place at different points in the emotion generative process. Therefore it can be distinguished between antecedent-focused and response-focused strategies as shown in figure 2. Antecedent-focused strategies act before emotion response tendencies are activated whereas response-focused strategies act after the arousal of emotions. These strategies can be classified in five more specific types: Situation Selection, Situation Modification, Attentional Deployment, Cognitive Change and Response Modulation. The first four types belong to antecedent-focused strategies, the last one to response-focused strategies.
Summary of Chapters
1 Introduction: Provides a theoretical foundation for the intersection of emotion theory and economic decision-making, emphasizing the importance of physiological measures like HRV.
2 Emotion regulation: Details Gross’s process model of emotion regulation, physiological basics of heart rate variability, and provides a literature review of existing experiments in economics.
3 Experimental results: Describes the methodology and empirical analysis of three specific laboratory experiments investigating the relationship between HRV, emotion regulation, and bidding behavior.
4 Conclusion and outlook: Summarizes the key empirical findings, discusses the observed inconsistencies in the data, and proposes avenues for future research in auction design.
Keywords
Emotion Regulation, Bidding Behavior, Auctions, Heart Rate Variability, HRV, Physiological Measures, Cognitive Reappraisal, Expressive Suppression, Economic Decision-Making, Inhibitory Control, Autonomic Nervous System, Risk Aversion, First-Price Sealed Bid, Experimental Economics.
Frequently Asked Questions
What is the fundamental scope of this research?
The thesis explores the complex interaction between human emotional regulation mechanisms and their subsequent impact on rational bidding strategies in economic auction environments.
What are the central thematic areas?
The core themes include the application of Gross’s process model of emotion regulation, the use of HRV as a proxy for autonomic function, and the comparative analysis of bidding behaviors in specific experimental auction scenarios.
What is the primary research question?
The study asks whether individual differences in emotion regulation, as indicated by resting HRV, predict bidding behavior and risk-taking tendencies in first-price sealed bid auctions.
Which scientific methods were employed?
The author conducted three separate laboratory experiments (Regret, Emotion Induction, and Human vs. Computer) and utilized statistical methods, specifically linear regression analysis, to evaluate the relationship between physiological data and auction bids.
What does the main body of the work encompass?
It encompasses a detailed breakdown of experimental design, data analysis from the three studies, and an extensive discussion on how physiological arousal influences decision-making in competitive environments.
Which keywords characterize this work?
Key terms include Emotion Regulation, Heart Rate Variability (HRV), First-Price Sealed Bid (FPSB) Auctions, Cognitive Reappraisal, and Expressive Suppression.
How does the "Regret Experiment" influence the research findings?
This experiment specifically addresses how information feedback concerning "loser regret" and "winner regret" triggers different emotional responses, which in turn statistically alters the bid/value ratio in subsequent auction rounds.
What role does the "Human versus Computer" experiment play?
This experiment tests the hypothesis that playing against a human opponent triggers higher emotional arousal than a computer opponent, and analyzes whether this difference in arousal manifests as a change in the participant's bidding strategy.
- Arbeit zitieren
- Anonym (Autor:in), 2012, Emotion Regulation and Bidding in Auctions, München, GRIN Verlag, https://www.grin.com/document/300838
