Do Attractive People Get a Better Deal? An Experimental Study

Abstract

During recent two decades the behavioral operations literature has proved with numerous studies that operational contracting allies the economic incentives with the behavioral aspects. Social considerations (such as fairness, trust and trustworthiness, reciprocity, and others) motivate the decision-maker for an unplanned change in own behavior which may lead to the great deviation from the rational choice. However, the triggering mechanism is still underexplored. The goal of our research is to shed light on the existence of an effect of seeing human faces (i.e., “a face effect”) on the behavioral economic choices. We conduct a series of controlled experiments with the photographs of human faces shown in the newsvendor setting. The experimental data suggests the evidence supporting that the human face plays the role of an environmental moderator which triggers and intensifies the social considerations. To better understand the behavioral reactions we examine the effect of faces with various characteristics focusing on the effect of facial attractiveness and gender looks. We find that the decision-makers systematically deviate in the selected choices of the wholesale price and the order quantity when seeing the counterpart’s face. Moreover, facial attractiveness and gender are significant motivators for the behavioral shifts in economic decisions. To explain how seeing the counterpart’s face, facial attractiveness and gender affect the decision choices, we apply the behavioral model that incorporates quantal response equilibrium, altruistic, and fairness concerns. This study suggests that knowledge of a counterpart’s face is valuable in a supply chain contracting.

Keywords: Newsvendor Game, Face effect, Facial Attractiveness, Experimental economics, Game theory, Altruism, Fairness