The Effect of Emotions on Economic Decision-Making MAS 630: Affective Computing Javier Hernandez...

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The Effect of Emotions on Economic Decision- Making MAS 630: Affective Computing Javier Hernandez Rivera [email protected]

Transcript of The Effect of Emotions on Economic Decision-Making MAS 630: Affective Computing Javier Hernandez...

The Effect of Emotions on Economic Decision-Making

MAS 630: Affective ComputingJavier Hernandez Rivera

[email protected]

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Contents• Motivation & Project Goals• Background• Experimental Setting• Data Synchronization & Visualization• Preliminary Data Analysis• Conclusions

Motivation&

Project Goals

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Affect in Decision MakingEmotions have been long neglected in decision making (DM) in favor of a deliberative and reason-based decision making

Why? Affect can lead us to irrational decision making (ignoring the odds or negative consequences)

Playing the lottery

Smoking

Flying by plane

(Shafir, Simonson, & Tversky, 1993)

Happy

Relaxed

Fearful

Makes People

Feel

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Project GoalsWhat?• Validate current economic DM theories (e.g.,Somatic

Marker Hypothesis) in different settings• Understand how negative emotions (fear and anger)

affect the DM process

How?• Emotion elicitation• Two-armed Bandit task• Electrodermal activity (EDA)

Why?• Understand the role of emotions in DM• Explore the benefits and limitations of most common

emotional responses to catastrophes

Background

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Roles of Emotions in Decision Making

3) Encode and recall information

(Peters E., Vastfjall D., Garling T. & Slovic P, 2006)

1) Minimize negative emotions

2) Emotions as common currency

4) Motivator of information processing and behavior

vs

Positive Negative

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Factors that Influence Decision Making

Uncertainty2,3

Sad8

Sexual Arousal5

Time1

Risk3,4

Ownership

Hunger6

Visceral States

Relaxed7

Disgusted8

6(Read & Leeuwen, 1998)8(Lerner, Small & Loewenstein, 2004)

Perc

eive

dva

lue

time

1 (Lowenstein, 1992)

7(Pham, Hung, Gorn, 2011)

2(Bar-Anan., Wilson & Gilbert , 2009) 4(MacGregor et al., 2005)

3(Lerner, & Tiedens, 2006)5(Ariely & Loewenstein, 2006)

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Decision Making and PhysiologySomatic Marker Hypothesis (SMH)

A B C D

Disadvantageous decksLead to overall loss

Risky option (high variance)

Advantageous decksLead to overall gain

Safe option (low variance)

(Bechara A., Damasio H., & Tranel D. 1991, 1997)

Observation: Higher EDA responses before choosing risky and disadvantageous options, even before people could consciously identify the risky decks.

x 100 Trials

Theory: Physiological responses (a.k.a. somatic markers), learned in daily life activity, consciously or unconsciously influence the decision-making process.

Experiment: Iowa Gambling task

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Anger and Fear

Anger FearUncertainty

UncontrolledCertaintyControl

Risk-seekingOptimistic assessments

Appraisal to negative events1

Influence on Decision Making1

1(Lerner and Keltner, 2000,2001) 2(Lerner, Dahl, Hariri & Taylor, 2006)

Risk-aversePessimistic assessments

PhysiologycalResponses2

Low High

Most common emotional reactions after catastrophic events such as the terrorist attacks of 9/11 or the economical crisis

Experimental Setting

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Designed & conducted by Hyungil Ahn(Ahn, 2010)

Experimental Setting

Safe option (low variance)

is better

Option 1Option 2

Risky option (high variance)

is better

Fear

Anger

Bet Money

Neutral Gain

Loss

x 25 Trials

Bet Money

x 25 Trials

Option 1Option 2

Emotions Ownership Risk + Uncertainty

+- +-

Domain 1 Domain 2

Experimental Setting: 1 Trial

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2

3

4 5 6

EDA

Time

1 2 3 4 5

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Data Synchronization&

Visualization

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Data Synchronization

EDA(20 Hz)

Surveys

Task Activity

20 participants were excluded because of missing information

15 participants were excluded because of corrupted signals

(artifacts, low response)

Number of Participants

Neutral Anger Fear

Gain 3 3 5

Loss 4 5 5

Neutral Anger Fear

Safe 7 8 10

Risky 7 8 10

Fram

es

Best

Opti

on

25 participants

2 sessions

x = 1250trials

FilteringLoss-pass

filter(0.16 Hz cutoff

frequency)

NormalizationScale each

subject between 0 and 1

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Data Visualization (Neutral)

Data in

Risky Option is Better Safe Option is BetterVideoVideo

GainFrame

(3 participants)

LossFrame

(4 participants)

Neutral

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N3)(N3N2)(N2N1)(N1

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the optimal selection)

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Data Visualization (Anger)

Data in

Risky Option is Better

Safe Option is Better VideoVideo

GainFrame

(3 participants)

LossFrame

(5 participants)

Anger8 participants

(400 trials)

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Data Visualization (Fear)

Data in

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Risky Option is BetterSafe Option is Better VideoVideo

GainFrame

(5 participants)

LossFrame

(5 participants)

Fear10 participants

(500 trials)

PreliminaryData Analysis

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Behavioral Responses: Speed

Aver

age

Tria

l Re

spon

se T

ime

(sec

)Neutral

(N = 350)Anger

(N = 399)

0.5 1 1.5 2 2.5 3 3.50

5

10

15

20

25

Fear(N = 500)

People answer significantly faster in the negative emotional states, and fearful people are significantly faster than angry people.

Standard Error of the Mean (SEM)

Betting

Trial

EDA

Time

1 2 3 4 5 6

Surveys

* Statistically Significant (Two Sample T-Test)

* *

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Advantageous Disadvantageous

Neutral FearAnger

Overall, people in the three emotional conditions perform similarly.

Negative states are slightly better when the safe option is the optimal one, but they are slightly worse when the risky option is the optimal one. Fearful people tend to perform slightly better than angry people

Neutral Anger Fear0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

% R

isky

Emotions - Median Anticipatory Signal

Low High0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

% R

isky

Start Outcome - Median Anticipatory Signal

D1 (Low risk is better) D2 (High risk is better)0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

% R

isky

Domains - Median Anticipatory Signal

AdvantageousDisadvantageous

Neutral Anger Fear0

0.1

0.2

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0.4

0.5

0.6

0.7

0.8

% R

isky

Emotions - Median Anticipatory Signal

Low High0

0.1

0.2

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0.4

0.5

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% R

isky

Start Outcome - Median Anticipatory Signal

D1 (Low risk is better) D2 (High risk is better)0

0.1

0.2

0.3

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0.5

0.6

0.7

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% R

isky

Domains - Median Anticipatory Signal

AdvantageousDisadvantageous

Safe Option

Is Better

Risky Option is

Better

Behavioral Responses: Performance%

of

Sele

ction

s

**

**** Statistically Significant (Two Sample T-Test)

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Behavioral Responses: Risk Preference

Neutral Anger Fear0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

% R

isky

Emotions - Median Anticipatory Signal

Low High0

0.1

0.2

0.3

0.4

0.5

0.6

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% R

isky

Start Outcome - Median Anticipatory Signal

D1 (Low risk is better) D2 (High risk is better)0

0.1

0.2

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0.4

0.5

0.6

0.7

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% R

isky

Domains - Median Anticipatory Signal

Non-RiskyRisky

Non-Risky Option Risky Option

Neutral Anger Fear0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

% R

isky

Emotions - Median Anticipatory Signal

Low High0

0.1

0.2

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0.4

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isky

Start Outcome - Median Anticipatory Signal

D1 (Low risk is better) D2 (High risk is better)0

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0.2

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isky

Domains - Median Anticipatory Signal

Non-RiskyRisky

Neutral FearAnger

GainFrame

LossFrame

Although people in the neutral state significantly choose riskier options, people in the negative states prefer non-riskier options.

In the loss frame, people prefer the riskier options. The difference is significant for the neutral and fear settings.

% o

f Se

lecti

ons

* Statistically Significant (Two Sample T-Test)

*

*

*

*

N A F0

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sim

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Op

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age

of P

leas

antn

ess

Ratin

gs o

n th

e O

utco

mes

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age

of th

e %

of

Adva

ntag

eous

Sel

ectio

ns

Gain Frame Loss Frame

Angry people in the loss frame perform slightly better than angry people in the gain frame.

As expected, the overall pleasantness ratings on the outcomes are slightly lower in the loss frame. Moreover, angry people are surprisingly unpleased even though they obtained slightly higher outcomes.

Behavioral Responses: Pleasantness

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Preprocessing for EDA Analysis

EDA

FilteringLoss-pass

filter(0.16 Hz cutoff

frequency)

NormalizationScale each

subject between 0 and 1*

Baseline RemovalSmoothed

Minimum Sliding Window over 10

minutes

*(Lykken, D.T., Venables, P.H, 1971)

5 10 15 20 25 30 35 400

0.1

0.2

5 10 15 20 25 30 35 400

0.1

0.2

0.3

5 10 15 20 25 30 35 400

0.1

0.2

5 10 15 20 25 30 35 400

0.1

0.2

0.3

Minutes

µS

Original SignalLow-pass filtered signalBaselineCorrected signal

Feature Extraction

Normalized Area under the

Curve

Anticipatory Responses: SMHIowa Gambling Task

AdvantageousDisadvantageous

Two-Armed Bandit Task

The SMH hypothesis (higher EDA responses before disadvantageous selections) seems plausible when the Safe Option is optimal and it might be delayed when the Risky Option is the optimal one.

Tota

l # S

elec

tions

Aver

age

Activ

ation

1-8 9-17 18-250

1

2

x 10-4 N (n: 625)

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CT

IV

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1

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Trials

Tota

l # o

f O

ptio

ns

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1

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x 10-4 N (n: 625)

Trials

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TIV

1-8 9-17 18-250

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Trials

Tot

al

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f O

ptio

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1-8 9-17 18-250

1

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x 10-4 N (n: 625)

Trials

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TIV

1-8 9-17 18-250

1

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9N

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f O

ptio

ns

Safe Option Is Better Risky Option is BetterSafe Option Is Better

Trials1-8 9-17 18-25 1-8 9-17 18-25

1-8 9-17 18-250

1

2

x 10-4 N (n: 625)

Trials

AC

TIV

1-8 9-17 18-250

1

2

3

4

5

6

7

8

9N

Trials

Tota

l # o

f O

ptio

ns

Pre-Punishment

Pre-Hunch Hunch Conceptual

Period *

* Statistically Significant

* * *

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Main Limitations of the Analysis

0 5 10 15 20 25

InitTrial(0.00 sec)

BetClick(1.86 sec)

SelectOption(1.65 sec)

GetOutcome(0.64 sec)

AnswerExperience(6.28 sec)

AnswerConfidence(4.15 sec)

AnswerPrediction(5.66 sec)1 2 3 4 5 6

Betting~4 sec.

AnsweringSurveys~16 sec.

Average EDA response

(N: 1250 trials)

Too short to display

anticipatory responses?

Cognitive load of the first survey?

1) Reduced number of participants (35 part. were excluded)

2) Consecutive tasks distort EDA responses

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Conclusions• People in the negative states bet faster than

people in the neutral state.• Fearful people bet faster and performed slightly

better than angry people.• Although most of the people preferred riskier

options, angry and fearful people in the gain frame preferred safer options.

• Angry people performed slightly better in the loss frame.

• Angry people were less pleased in the loss frame even though they obtained relatively higher outcomes.

• Although the SMH seemed plausible in the Two-armed Bandit Task, further analysis is required.

Readings

Data Synchronization

Deliverables

Data Analysis

Time Distribution

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References IAhn, H.I. (2010). Modeling and Analysis of Affective Influences on Human Experience, Prediction,

Decision Making, and Behavior. MIT PhD Thesis. Ariely D., & Loewenstein G. (2006). The Heat of the Moment: The Effect of Sexual Arousal on Sexual

Decision Making. J. Behav. Dec. Making, (19), 87-98Bar-Anan Y., Wilson T & Gilbert (2009) . The Feeling of Uncertainty Intensities Affective Reactions.

Emotion 9, (1), 123-127Bechara A., Damasio H., & Tranel D. (1997). Deciding Advantageously Before Knowing the

Advantageous Strategy. Science.Damasio, A. R., Tranel, D., & Damasio, H. (1991). Somatic Markers and the Guidance of Behavior:

Theory and Preliminary Testing. Lerner, J. S., Dahl, R. E., Hariri, A. R., & Taylor, S. E. (2007). Facial Expressions of Emotion Reveal

Neuroendocrine and Cardiovascular Stress Responses. Biol Psychiatry; 61:,253-260Lerner, J. S., & Keltner, D. (2000). Beyond Valence: Toward a Model of Emotion-specific Influences

on Judgment and Choice. Cognition and Emotion, 14(4), 473–493.Lerner, J. S., & Keltner, D. (2001). Fear, Anger, and Risk. Journal of Personality and Social Psychology,

81(1), 146–159.Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart Strings and Purse Strings: Effects of

Emotions on Economic Transactions. Psychological Science, 15, 337–341.

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References IILoewenstein, G. & Prelec, D. (1992). Anomalies in Intertemporal Choice: Evidence and an

Interpretation. Quarterly Journal of Economics. 573-597Lykken, D.T. & Venables, P.H.(1971) Direct Measurement of Skin Conductance: A Proposal for

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