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ECON 4309
Literature Review
Proposal
individual assessments of risk, value, and judgment. Traditional economic models and
expected utility theory do not account for emotional and visceral influences and fail to
distinguish these systems from rational deliberation. One area of economics that suffers
from this oversight is the valuation of public goods through contingent valuation methods
(CVM.)
be two groups: a control group and a group that has undergone a “treatment.” I will
invoke a positive or negative emotional state in the “treatment group” to observe how
different emotional states affect people’s valuation and preferences concerning public
weakness of CVM and why it is not an optimal method for benefit-cost analysis.
Katherine Bray
ECON 4309
Literature Review
Literature Review
Emotional states are induced in laboratory settings with chemical, audio, visual,
individuals. The exclusion of emotion in economic and decision theory has significant
consequences; especially for methods seeking to value public goods using direct
measures and surveys such as contingent valuation method (CVM.) Considering the
impact external stimuli had on emotional state, there are serious repercussions in failing
Existing literature reveals various ways in which emotional and visceral states are
from attitudes and other types of states in that they are neural based, rapid, and automatic
responses to stimuli that encompass a wide range of positive and negative feelings.
Certain areas of the brain are localized and likely associated with various emotions; of
these fear is understood and studied the most because it is directly linked to stimulation in
the Amygdala1 and can be measured by fMRI, PET, and other brain imaging techniques
(Zald, 2003).
Clore reviewed hundreds of scholarly articles to verify a direct and crucial role of
emotions on choice, judgment, assessment, and risk estimates (Clore, 1992). Other
1
Located in the medial temporal lobe of the brain
Katherine Bray
ECON 4309
Literature Review
studies focus on how emotions differ from other inputs in decision-making and find that
(Zajonc, 1998). Loewenstein finds that “when people are confronted with ambiguity
economists and psychologists that emotions are a crucial component in behavior and
must be accounted for in theories and models. However, it is only possible to include
their influence if it is known what stimuli correspond to which emotions and how they
are produced. There are several types of stimuli, each with strengths and drawbacks
The most reliable way of inducing a specific emotional state is with chemical
stimuli that can be directly observed and measured with brain imaging technology. A
study by Kosfeld shows that patients injected with the hormone Oxytocin are more
trusting and demonstrate higher degrees of social interaction and cooperation (Kosfeld,
2005). Several other studies use procaine to activate the amygdala in brains of patients
chemicals are effective, there are several drawbacks to this type of stimuli; namely they
Like chemical stimuli, conditioned stimuli are easily observed and verifiable in
spawning emotional responses among those conditioned. Countless studies use tones,
light, and electric shocks to elicit target responses. Some stimuli are considered to be
biological in producing fear in; such as heights, snakes, spiders, water, enclosed spaces,
and strangers. Loewenstein studies the effect of these stimuli, along with crude,
Katherine Bray
ECON 4309
Literature Review
subliminal, and priming doses on animal and human behavior to show they have
emotions that seem to have no direct relation to the target judgment by an individual. A
study by Lerner uses three video clips to successfully create emotional states in
sadness, and a neutral clip from “National Geographic” is shown to the control group
(Lerner, 2004). Many studies use erotic films and sexual imagery to arouse individuals,
demonstrates the power of smiling by revealing a strong positive correlation between the
frequency of smiling and the amount of tips waitresses make (Tidd, 1978).
Pictures of faces are common visual stimuli used to alter mood. A study
measuring brain activity shows significant activation in the amygdala when patients are
shown happy faces, beautiful faces, faces of loved ones, masked or fearful faces, and
faces from racial out-groups (Zald, 2003). This same study reveals amygdala stimulation
occurs in response to extremely harsh or happy tones of voice, white noise, adverse sound
collages, and pleasant “chill” music. Other studies find no significant correlation
Some studies rely on participants to create their own emotional states. Phan
effects of sexual arousal on behavior and attitude. In one study participants see sexual
Katherine Bray
ECON 4309
Literature Review
imagery and masturbate while rating their level of arousal and attitude towards various
moral behaviors and judgments (Ariely, 2006). Konecni, Nordgren, and Loewenstein
have conducted several studies asking individuals to use mental imagery and recollection
to produce emotional states and observe visceral responses and anticipatory emotional
significant to an individual can be effective in altering their emotional state and changing
Meylan shows that,“positive or negative emotions may arise from windows, natural light,
natural colors, plants, moving water, air quality, and time of day” (Meylan, 2007).
Williams finds strong correlations between spatial distance and how people rate their
enjoyment or distress from watching different genres of media. Individuals also estimate
lower calorie levels in food and weaker reports of emotional attachment to family and
hometown when distance increases (Williams, “Keeping...”). Other studies reveal that
wide or narrow aisles are and the level of crowding (Levav, 2009). Distance above sea-
level can also spawn emotions such as fear and anxiety; in one study participants were far
more attracted to the surveyor if they were given the survey on a suspension bridge rather
study conducted by Williams asks participants to hold either a warm or cold item; those
holding the warm item made more positive judgments and were more likely to buy a gift
for someone other than themselves (Williams, “Experiencing…”). Rind considers “the
Katherine Bray
ECON 4309
Literature Review
sunshine effect” and shows that stock markets returns are higher and service-workers
receive better tips on days when it is sunny; conversely they are lower on cloudy days
(Rind, 1996). It is also shown that sunlight penetration induces relaxation, though it is a
“Research attests to the power of olfactory cues. Smell, more so than the other
sensory systems, has been found to be evocative of emotional memories” (Ditto, 2006).
Some researchers uses odors and adverse smells to create negative emotional states while
others use appetitive smells such as popcorn or freshly baked cookies to trigger hunger
states and observe changes in behavior that result from the stimuli (Rotton, Zald,
tend to exhibit behavior that is more impulsive and less sensitive to risk.
The last way emotional states are successfully induced is with situational stimuli.
hunger state significantly impacts the level of attraction, anxiety, and arousal individuals
economists study emotions in response to ownership and the endowment effect as well;
finding significant differences in action depending on which condition one faces: selling
induced with tedious memory trials and difficult computer tasks, leading to decreases in
how emotional states change behavior. Though there are infinite ways this occurs,
Katherine Bray
ECON 4309
Literature Review
certain behaviors emerge repeatedly throughout the literature. In multiple studies, Slavic
and Smith, observe that conditions of uncertainty or lack of control generally lead to
estimates that are less optimistic and less risky; in the presence of certainty or control
individuals outlook is more optimistic and risk seeking (Slavic, Smith). In regards to the
endowment effect, a study by Lerner suggests that participants demonstrate lower selling
prices and buying prices when they feel disgust, and higher buying prices when they feel
Sexual arousal and its impact on behavior is studied extensively and is seen to
effects multiple areas of judgment, including attraction, aggression, and changes in risk
sensitivity (Ariely). Fear and anxiety tend to produce feelings of attraction and lower risk
hunger or appetitive visceral states encourage behavior that is less sensitive to risk and
more impulsive in nature (Nordgren, 2007). This same study measures motivation,
empathy, compassion, and impulsiveness to show significant changes in these areas when
participants are induced with the emotional state of fatigue (Nordgren, 2007).
the implications of emotional state on judgment and behavior is undeniable and should be
studied further. Failing to account for this variable in decision-making theory is a fault
and must be rectified in order to increase the predictive power of economic models and
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Katherine Bray
ECON 4309
Literature Review
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