Do Attractive People Get a Better Deal? An Experimental Study

Abstract

Over the past two decades, the field of behavioral operations has demonstrated that combining economic incentives with behavioral aspects results in successful operational contracting. 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 a 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 economic decision-making behavior. We conduct a series of controlled experiments using photographs of human faces in a newsvendor setting. Our experimental data provides evidence that the human face plays the role of an environmental moderator which triggers and intensifies the social considerations. To gain a deeper understanding of behavioral responses, we examined the impact of faces with varying characteristics, with a particular focus on the effects of facial attractiveness and perceived gender. We find that the decision-makers systematically deviate from their choices of wholesale prices when seeing the counterpart’s face. To explain how facial attractiveness and gender affect the decision choices, we develop a behavioral model that incorporates altruistic and fairness concerns.

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