Abstract
This article contributes to the research agenda of accommodating psychological insights in conventional lab experiments. We specifically test whether inducing subjects into different mood states has a significant effect on subjects’ rationality (in the form of preference reversals) and on bidding behaviour in home-grown value auctions. We find that mood states can significantly affect the rate of preference reversals and bidding behaviour in experimental auction valuation. Specifically we find that subjects under a positive mood state exhibit more rational behaviour (i.e., less preference reversals) and provide lower bid values than others.
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