Deborah A. Small

Heart Strings and Purse Strings Carryover Effects of Emotions on Economic Decisions

We examined the impact of specific emotions on the endowment effect, the tendency for selling prices to exceed buying or “choice” prices for the same object. As predicted by appraisal-tendency theory, disgust induced by a prior, irrelevant situation carried over to normatively unrelated economic decisions, reducing selling and choice prices and eliminating the endowment effect. Sadness also carried over, reducing selling prices but increasing choice prices—producing a “reverse endowment effect” in which choice prices exceeded selling prices. The results demonstrate that incidental emotions can influence decisions even when real money is at stake, and that emotions of the same valence can have opposing effects on such decisions.

Helping a Victim or Helping the Victim: Altruism and Identifiability

Although it has been claimed that people care more about identifiable than statistical victims, demonstrating this “identifiable victim effect” has proven difficult because identification usually provides information about a victim, and people may respond to the information rather than to identification per se. We show that a very weak form of identifiability—determining the victim without providing any personalizing information—increases caring. In the first, laboratory study, subjects were more willing to compensate others who lost money when the losers had already been determined than when they were about to be. In the second, field study, people contributed more to a charity when their contributions would benefit a family that had already been selected from a list than when told that the family would be selected from the same list.

The Scarecrow and the Tin Man: The Vicissitudes of Human Sympathy and Caring

Why do some victims elicit outpourings of sympathy from those who are unaffected, while others do not? The authors propose a theoretical framework for making sense of the vicissitudes of sympathy based on the interaction between two qualitatively different mental processes. One, which the authors term “sympathy,” is caring but immature and irrational. The other process, which the authors term “deliberation,” is rational but uncaring. After proposing a framework for how these two factors interact, the authors first discuss a variety of factors that affect the strength of sympathy, including whether one is in the same state as the victim, ones past and vicarious experiences, proximity, similarity, vividness, and newness. Next, the authors discuss factors that affect the relative influence of deliberation. The framework helps to integrate a wide range of disparate experimental findings and provides a possible resolution to parallel debates taking place in psychology and economics over the nature of altruism.

Who Goes to the Bargaining Table? The Influence of Gender and Framing on the Initiation of Negotiation

Unlike typical negotiation experiments, these studies investigated when men and women initiate negotiations in the absence of overt prescriptions to negotiate. Using a new experimental paradigm, the authors showed that the framing of situations is a critical driver of gender differences in initiating negotiations. Drawing on literature on language, power, and politeness, the authors argued that framing situations as opportunities for negotiation is particularly intimidating to women, as this language is inconsistent with norms for politeness among low-power individuals, such as women. By contrast, framing situations as opportunities for asking is much less intimidating to women, as this language is more polite and role-consistent. Consequently, gender differences in initiating negotiations persisted when situations were framed as opportunities for negotiation yet were eliminated when situations were framed as opportunities to ask. Moreover, primed power attenuated gender differences in aversive reactions to the negotiation frame. In all, the studies presented begin to elucidate the reasons for gender differences in initiating negotiations and further illustrate that such effects depend on the situation.

Evolving Judgments of Terror Risks: Foresight, Hindsight, and Emotion.

The authors examined the evolution of cognitive and emotional responses to terror risks for a nationally representative sample of Americans between late 2001 and late 2002. Respondents’ risk judgments changed in ways consistent with their reported personal experiences. However, they did not recognize these changes, producing hindsight bias in memories for their judgments. An intensive debiasing procedure failed to restore a foresightful perspective. A fear-inducing manipulation increased risk estimates, whereas an anger-inducing manipulation reduced them—both in predictions (as previously observed) and in memories and judgments of past risks. Thus, priming emotions shaped not only perceptions of an abstract future but also perceptions of a concrete past. These results suggest how psychological research can help to ensure an informed public.

Microfinance Decision Making: A Field Study of Prosocial Lending

Prosocial lending in the form of micro-financing, small uncollateralized loans to entrepreneurs in the developing world, has recently emerged as a leading contender as a cure for world poverty. Our research investigates, in a field setting with real world and consequential data, the characteristics of borrowers that engender lending. We observe that lenders favor individual borrowers over groups or consortia of borrowers, a pattern consistent with the identifiable victim effect. They also favor borrowers that are socially proximate to themselves. Across three dimensions of social distance (gender, occupation, and first name initial) lenders prefer to give to those who are more like themselves. Finally, we discuss policy implications of these findings.

Evaluating the success of terror risk communications.

TERRORISM HAS CREATED unprecedented choices for ordinary people. As individuals, they must decide how to protect themselves and their families. As citizens, they must decide which policies best serve the nation’s desire for physical safety, economic vitality, civil liberties, and social cohesion. Without good information, people may find themselves living with choices that they do not understand or want. Feeling that they have been denied critical information further complicates an already difficult situation. If things go badly, having misunderstood the risks can intensify the attendant pain and regret. Citizens’ dissatisfaction may extend to the leaders and officials who seemingly failed to meet their information needs, as has happened with other apparently mismanaged risks.1–6 Reducing these social risks means providing citizens with relevant information in a credible, comprehensible form. Doing so requires analytical research, to identify the risks most critical to citizens’ decision making, and empirical research, to identify the current state of their belief.7–8 Risk communications should focus on those facts that people most need to understand but have yet to learn. Just as citizens need information in order to respond effectively, policy makers need to understand citizens’ beliefs, in order to create behaviorally realistic policies. In a November 2002 survey of Americans, Blendon et al.9 documented the mixed success of communications about smallpox. We report on a concurrent survey with a similar sample, embedding beliefs regarding smallpox risks in a broader set of issues and focusing on facts that are easily understood if communicated properly and that are critical to managing widely reported risks. If citizens have not learned these facts, then our risk communication processes have somehow failed to convey them in a salient, comprehensible, credible way. Because effective decision making requires recognizing the extent of one’s understanding, we look at the strength of lay beliefs, as well as their general trend. People who confidently hold erroneous beliefs may not consult better-informed sources before acting. They may also not be alert to signs of things going awry.

Fatal (Fiscal) Attraction: Spendthrifts and Tightwads in Marriage

Although much research has found that “birds of a feather flock together,” the authors suggest that opposites tend to attract when it comes to certain spending tendencies; that is, tightwads, who generally spend less than they would ideally like to spend, and spendthrifts, who generally spend more than they would ideally like to spend, tend to marry each other, consistent with the notion that people are attracted to mates who possess characteristics dissimilar to those they deplore in themselves. Despite this complementary attraction, tightwad–spendthrift differences within a marriage predict conflict over finances, which in turn predicts diminished marital well-being. These relationships persist when controlling for important financial outcomes (household-level savings and credit card debt). These findings underscore the importance of studying the relationships among money, consumption, and happiness at an interpersonal level.

Self-Interest Without Selfishness The Hedonic Benefit of Imposed Self-Interest

Despite commonsense appeal, the link between self-interest and happiness remains elusive. One reason why individuals may not feel satisfied with self-interest is that they feel uneasy about sacrificing the needs of others for their own gain. We propose that externally imposing self-interest allows individuals to enjoy self-benefiting outcomes that are untainted by self-reproach for failing to help others. Study 1 demonstrated that an imposed self-interested option (a reward) leads to greater happiness than does choosing between a self-interested option and a prosocial option (a charity donation). Study 2 demonstrated that this effect is not driven by choice in general; rather, it is the specific trade-off between benefiting the self and benefiting others that inhibits happiness gained from self-interest. We theorize that the agency inherent in choice reduces the hedonic value of self-interest. Results of Study 3 find support for this mechanism.

The Braggart’S Dilemma: on the Social Rewards and Penalties of Advertising Prosocial Behavior

People often brag about, or advertise, their good deeds to others. Seven studies investigate how bragging about prosocial behavior affects perceived generosity. The authors propose that bragging conveys information about an actors good deeds, leading to an attribution of generosity. However, bragging also signals a selfish motivation (a desire for credit) that undermines the attribution of generosity. Thus, bragging has a positive effect when prosocial behavior is unknown because it informs others that an actor has behaved generously. However, bragging does not help—and often hurts—when prosocial behavior is already known, because it signals a selfish motive. In addition, the authors demonstrate that conspicuous cause marketing products have effects akin to bragging by signaling an impure motive for doing good deeds. Finally, the authors argue that bragging about prosocial behavior is unique because it undermines the precise information that the braggart is trying to convey (generosity). In contrast, bragging about personal achievements does not affect perceptions of the focal trait conveyed in the brag. These findings underscore the strategic considerations inherent in signaling altruism.