An anger premium: An experiment on the role of counterpart emotions in coordination

Abstract

Using an online experiment, we induce happy and angry emotions among MTurk participants and examine how information of their counterparts’ emotions affects their aggressive versus accommodating choices and coordination outcomes in the Battle-of-the-Sexes games. We find that participants are significantly more likely to choose the accommodating (aggressive) option if their counterparts are angry (happy), regardless of their induced emotions. Moreover, coordination rates are significantly improved when participants make decisions given counterparts’ emotions. Among the successfully coordinated pairs, angry participants are more likely to choose the aggressive option and thus gain a larger share of the payout, or an anger “premium”. A potential mechanism could be that information of counterparts’ emotions modulates individual beliefs of counterparts’ decisions and thus, influences coordination outcomes.