The Happiness Premium: The Impact of Emotion on Individuals’ Willingness to Pay in Online Auctions

Abstract

Much research across various disciplines has studied individuals’ bidding behavior in online auctions. Emotion is an important factor affecting individual behavior, but we know little about its effects in online auctions. We conducted a lab experiment to investigate the impact of positive emotion on individuals’ willingness to pay in online auctions. We found that individuals with positive emotions bid more than those with neutral emotions; that is, they paid a “happiness premium” of about 10 percent. The effect size was medium (Cohen’s d = 0.51). This study contributes to electronic commerce literature by identifying emotion as an important factor affecting online auction behavior. The findings also provide guidance to auction website design: websites can increase bid amounts by inducing positive emotions in potential customers