Emotional Hazard in a Power-to-take Experiment

23 Pages Posted: 13 Nov 2002  

Ronald Bosman

VU University Amsterdam

Frans van Winden

University of Amsterdam - Faculty of Economics and Business (FEB); CESifo (Center for Economic Studies and Ifo Institute)

Abstract

In this experimental study of a two player power-to-take game, players earn an income in an individual effort task preceding the game. The game has two stages. First, one player can claim any part of the other's income (take rate). Then, the latter player can respond by destroying own income. We focus on how emotions influence responses and show: (1) a higher take rate increases (decreases) intensity of negative (positive) emotions; (2) negative emotions drive destruction; (3) at high emotional intensity, responders destroy everything; (4) expectations affect the probability of punishment. Emotional hazard is identified as a new source of efficiency costs.

Suggested Citation

Bosman, Ronald and van Winden, Frans, Emotional Hazard in a Power-to-take Experiment. The Economic Journal, Vol. 112, pp. 147-169, 2002. Available at SSRN: https://ssrn.com/abstract=308903

Ronald Bosman (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Frans Van Winden

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 18
CREED
Amsterdam 1018 WB
Netherlands
+31 20 525 4126 (Phone)
+31 20 525 5283 (Fax)

Paper statistics

Downloads
17
Abstract Views
1,385