Heart strings and purse strings carryover effects of emotions on economic decisions

ABSTRACT—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, irrele-vant 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 en-dowment 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. Two decades of research document the tendency for incidental emo-tion to color normatively unrelated judgments and decisions (for re-views, see Forgas, 1995; Loewenstein & Lerner, 2002; Schwarz, 1990). Early research found that positive emotions trigger more op-timistic assessments than negative emotions, whereas negative emo-tions trigger more pessimistic assessments than positive emotions, even if the source of the emotion has no relation to the target judg-ments (Johnson & Tversky, 1983). More recent research has demon-strated the importance of examining specific emotions in addition to global (positive-negative) feelings (Bodenhausen, Sheppard, & Kra