Live Biofeedback in Electronic Markets

223 Pages·2017·8.37 MB·English

by  Ewa Lux

Live Biofeedback in Electronic Markets
Zur Erlangung des akademischen Grades eines
Doktors der Wirtschaftswissenschaften
(Dr. rer. pol.)
bei der Fakultät für
Wirtschaftswissenschaften
am Karlsruher Institut für Technologie (KIT)
genehmigte
DISSERTATION
von
M. Sc. Ewa Lux
Tag der mündlichen Prüfung: 27.06.2017
Referent: Prof. Dr. Christof Weinhardt
Korreferent: Prof. Dr. Marc T. P. Adam
Karlsruhe, 2017
Acknowledgements
I would like to express my gratitude to my advisor Prof. Dr. Christof Weinhardt for en-
abling and supporting my research over the last 3 years. His enthusiasm and visionary
thinking have inspired me throughout this time. I would like to thank my co-advisor Prof.
Dr. Marc T. P. Adam for challenging and supporting me at all stages of my dissertation. His
remarks, ideas, expertise, proof reading, personal support, and encouragement motivated
and guided me throughout this time. My thanks also go to Prof. Dr. Ju-Young Kim and
Prof. Dr. Oliver Stein for serving on the board of examiners.
My sincere appreciation goes to all my colleagues. In particular, I thank Dennis Dann for his
infectious cheerfulness, Verena Dorner for her guidance, Anuja Hariharan for her cooper-
ative and supporting nature and exciting insights into Indian culture, Florian Hawlitschek
for his critical view and long-term collaboration, Niklas Horstmann for his overall sup-
port and making my time at the institute even more memorable, Dominik Jung for sharing
his methodological competence, Michael Knierim for his wise counseling and invaluable
expertise, Claudia Niemeyer for brightening up my time at the Institute, Jella Pfeiffer for
diverting discussions, and Timm Teubner for his helpful advice.
I thank all colleagues with whom I had the pleasure to collaborate in academic self-
administration and my students, in particular, Marc Albrecht, Fabian Both, Julia Doll, Sina
Helming, Lukas Kaiser, Marco Mandolfo, Christian Peukert, and Philipp Rouast for their
support and the enriching academic discourse.
I gratefully acknowledge financial support from Deutsche Forschungsgemeinschaft within
the project "Live Biofeedback and Emotion Regulation in Electronic Auctions" and from
Gesellschaft für experimentelle Wirtschaftsforschung e.V. through the Heinz Sauermann-
Förderpreis for the project "Live Biofeedback in Strategic Decision Making".
Finally, I express my heartfelt gratitude to those who are most important to me: my family
and friends. They encourage me in everything I do, help me to reflect myself, and remind
me of the multiplicity of life. I owe them more than words can describe.
Karlsruhe, June 2017
Ewa Lux
i
Abstract
Decisions in electronic markets are frequently made under time pressure and in compe-
tition to others. Both factors can cause the decision maker to experience high levels of
arousal. Without sound emotional processing, arousal can have detrimental effects on de-
cision making. In this thesis the use of live biofeedback to support emotion perception
and thus, to facilitate emotion regulation during emotionally charged decision making is
evaluated.
Based on a systematic literature review existing live biofeedback research is analyzed in
Chapter 2. A transmission model for live biofeedback is developed that classifies the main
components of live biofeedback applications and the flow of information in form of trans-
mission signals. To address the identified research gaps, three experimental studies (study
I-III) are designed that investigate the effects of arousal and the use of live biofeedback in
electronic markets.
Study I in Chapter 3 examines how arousal affects purchasing decisions with and without
social interaction to analyze the context dependence of the effects of arousal on decision
making. The results reveal that in auctions, where social interaction is a key characteristic,
arousal increases final prices. Purchasing decisions without social interaction, however, are
not affected by arousal. As social interaction has been identified as an essential factor for
arousal to affect decision making, the subsequent studies II and III investigate the effects of
live biofeedback in markets experiments that involve social interaction.
Study II in Chapter 4 evaluates the effects of live biofeedback on emotional processing
in the context of auction bidding. Without prior biofeedback training this novel user in-
terface element alters decision making processes at a cognitive and affective level. Study
participants, who suppress emotional expressions, experience higher levels of physiolog-
ical arousal. When provided with live biofeedback, this effect is mitigated. Furthermore,
participants who receive live biofeedback show increased coherence of physiological and
perceived arousal.
Study III in Chapter 5 examines the use of biofeedback in a game that has frequently been
used to model financial markets, that is, the beauty contest game. In this study, partic-
ipants complete a training in order to familiarize with the live biofeedback prior to the
experiment. The analysis reveals that live biofeedback increases arousal perception and
reduces suppression of emotional expressions. Importantly, participants who receive live
biofeedback yield higher decision making quality.
In summary, this thesis provides further insights into the effects of arousal on behavior
and how live biofeedback affects emotional processing and decision making in electronic
markets. The results of this thesis suggest that live biofeedback is a promising tool to
support emotion perception, regulation, and decision making of market participants.
iii
Contents
1. Introduction 1
1.1. Emotions and Economic Decision Making . . . . . . . . . . . . . . . . . . . . . 1
1.2. Live Biofeedback for Decision Support . . . . . . . . . . . . . . . . . . . . . . . 3
1.3. Research Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. Theoretical Background and Overview of Live Biofeedback Literature 11
2.1. Introduction to Self and Foreign Live Biofeedback . . . . . . . . . . . . . . . . 11
2.2. Theoretical Background of Live Biofeedback Systems . . . . . . . . . . . . . . 13
2.2.1. Fundamentals of Live Biofeedback . . . . . . . . . . . . . . . . . . . . . 13
2.2.2. Transmission Model for Live Biofeedback . . . . . . . . . . . . . . . . . 14
2.2.3. Sources and Transmitters: Modalities for Live Biofeedback . . . . . . . 15
2.2.4. Receivers and Destinations: Manifestations of Live Biofeedback . . . . 16
2.3. Literature Review Research Methodology . . . . . . . . . . . . . . . . . . . . . 18
2.4. Synthesizing Research on Self Live Biofeedback . . . . . . . . . . . . . . . . . 19
2.4.1. Self Live Biofeedback in Cognitive and Affective Processing . . . . . . 19
2.4.2. Self Live Biofeedback for Stress Management . . . . . . . . . . . . . . . 26
2.4.3. Self Live Biofeedback for Emotion Regulation . . . . . . . . . . . . . . 28
2.4.4. Self Live Biofeedback for User Experience . . . . . . . . . . . . . . . . . 29
2.5. Synthesizing Research on Foreign Live Biofeedback . . . . . . . . . . . . . . . 30
2.5.1. Foreign Live Biofeedback in Cognitive and Affective Processing . . . . 30
2.5.2. Foreign Live Biofeedback for Social Interaction . . . . . . . . . . . . . . 34
2.5.3. Foreign Live Biofeedback for User Experience . . . . . . . . . . . . . . 35
2.5.4. Foreign Live Biofeedback for Stress Management . . . . . . . . . . . . 36
2.6. Knowledge Gaps and Directions for Future Research on Live Biofeedback . . 37
2.7. Discussion of Live Biofeedback Literature . . . . . . . . . . . . . . . . . . . . . 40
2.7.1. Summary of Results of Existing Live Biofeedback Literature . . . . . . 40
2.7.2. Implications for Practice based on Existing Live Biofeedback Literature 42
2.7.3. Concluding Note on Existing Live Biofeedback Literature . . . . . . . 44
3. The Effects of Incidental Arousal on Auction Bidding and Final Prices 47
3.1. Introduction to Arousal and Auction Bidding . . . . . . . . . . . . . . . . . . . 47
3.2. Literature on Integral and Incidental Arousal and Decision Making . . . . . . 49
3.2.1. The Effects of Integral Arousal in Decision Making and Auctions . . . 49
3.2.2. The Effects of Incidental Arousal in Decision Making and Auctions . . 54
3.2.3. Experimental Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.3. Investigating the Effects of Incidental Arousal in Auctions . . . . . . . . . . . 57
3.3.1. Experimental Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3.3.2. Results and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
v
vi Contents
3.4. Investigating the Effects of Incidental Arousal in Non-Auction Contexts . . . 63
3.4.1. Experimental Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
3.4.2. Results and Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.5. General Discussion of Effects of Incidental Arousal . . . . . . . . . . . . . . . . 66
3.5.1. Summary of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
3.5.2. Theoretical Contributions and Future Research . . . . . . . . . . . . . . 68
3.5.3. Practical Implications for Auctioneers and Bidders . . . . . . . . . . . 69
3.5.4. Concluding Note on Incidenal Arousal . . . . . . . . . . . . . . . . . . 70
4. Impact of Live Biofeedback in Electronic Auctions 73
4.1. Introduction to Live Biofeedback in Electronic Auctions . . . . . . . . . . . . . 73
4.2. Theoretical Background on Live Biofeedback in Auctions . . . . . . . . . . . . 75
4.2.1. Cognitive and Affective Processing of Arousal . . . . . . . . . . . . . . 75
4.2.2. Arousal Perception and Live Biofeedback . . . . . . . . . . . . . . . . . 76
4.2.3. Arousal in Auction Bidding . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.3. Research Model for Live Biofeedback in Auctions . . . . . . . . . . . . . . . . 78
4.3.1. Influence of Live Biofeedback on Physiological Arousal . . . . . . . . . 79
4.3.2. Influences of Live Biofeedback on Perceived Arousal . . . . . . . . . . 80
4.3.3. Influences of Live Biofeedback on Auction Bidding . . . . . . . . . . . 80
4.4. Experiment for Analyzing Live Biofeedback in Auctions . . . . . . . . . . . . 81
4.4.1. Auction Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
4.4.2. Treatment Structure for Analyzing Live Biofeedback in Auctions . . . 83
4.4.3. Experimental Procedure for Analyzing Live Biofeedback in Auctions . 84
4.4.4. Measures for Analyzing Live Biofeedback in Auctions . . . . . . . . . 86
4.4.5. Perfect Stranger Matching . . . . . . . . . . . . . . . . . . . . . . . . . . 88
4.5. Effects of Live Biofeedback in Auctions: Experimental Results . . . . . . . . . 97
4.5.1. Manipulation Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.5.2. Live Biofeedback as an Information Systems Artifact . . . . . . . . . . 98
4.5.3. Effect of Live Biofeedback on Physiological Arousal . . . . . . . . . . . 98
4.5.4. Effect of Live Biofeedback on Perceived Arousal and Coherence . . . . 100
4.5.5. Effect of Live Biofeedback on Auction Bidding . . . . . . . . . . . . . . 102
4.6. Discussion of the Effects of Live Biofeedback in Auctions . . . . . . . . . . . . 105
4.6.1. Summary of Results and Theoretical Implications . . . . . . . . . . . . 105
4.6.2. Managerial Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
4.6.3. Limitations and Future Research . . . . . . . . . . . . . . . . . . . . . . 107
4.6.4. Concluding Note on Live Biofeedback in Auctions . . . . . . . . . . . . 109
5. Live Biofeedback for Decision Support under Time Pressure 111
5.1. Introduction to Live Biofeedback and Decisions under Time Pressure . . . . . 111
5.2. Theoretical Background and Related Work . . . . . . . . . . . . . . . . . . . . 113
5.2.1. Arousal and the Quality of Decision Making . . . . . . . . . . . . . . . 113
5.2.2. Live Biofeedback and Emotional Intelligence . . . . . . . . . . . . . . . 114
5.3. Experiment for Analyzing Live Biofeedback in Decision Making . . . . . . . . 117
5.3.1. Experimental Design: Live Biofeedback in the Beauty Contest . . . . . 117
5.3.2. Treatment Structure: Emotion Regulation and Live Biofeedback . . . . 118
5.3.3. Measures Used to Analyze Live Biofeedback for Decision Support . . 119
5.3.4. Experimental Protocol . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Contents vii
5.4. Live Biofeedback for Decision Support: Experimental Results . . . . . . . . . 123
5.4.1. Effects on Decision Quality . . . . . . . . . . . . . . . . . . . . . . . . . 123
5.4.2. Effects on Emotional Processing . . . . . . . . . . . . . . . . . . . . . . 126
5.5. Concluding Note on Live Biofeedback for Decision Support . . . . . . . . . . 132
6. Conclusions and Future Research 135
6.1. Summary of Results and General Discussion . . . . . . . . . . . . . . . . . . . 135
6.2. Outlook and Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
6.3. Concluding Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
A. Supplementary Material for Chapter 3 145
A.1. Participant Instructions for the Study in Chapter 3 . . . . . . . . . . . . . . . . 145
A.1.1. Instruction 1 of 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
A.1.2. Instruction 2 of 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
A.1.3. Instruction 3 of 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
A.2. Questionnaire for the Study in Chapter 3 . . . . . . . . . . . . . . . . . . . . . 151
B. Supplementary Material for Chapter 4 157
B.1. Participant Instructions for the Study in Chapter 4 . . . . . . . . . . . . . . . . 157
B.1.1. Instruction 1 of 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
B.1.2. Instruction 2 of 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
B.2. Questionnaire for the Study in Chapter 4 . . . . . . . . . . . . . . . . . . . . . 162
B.3. Pseudocode for Perfect Stranger Matching Algorithm . . . . . . . . . . . . . . 168
C. Supplementary Material for Chapter 5 171
C.1. Participant Instructions for the Study in Chapter 5 . . . . . . . . . . . . . . . . 171
C.1.1. Instruction 1 of 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
C.1.2. Instruction 2 of 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
C.1.3. Instruction 3 of 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
C.2. Questionnaire for the Study in Chapter 5 . . . . . . . . . . . . . . . . . . . . . 176
References 183
List of Abbreviations 209
List of Figures 211
List of Tables 213