Emotional Arousal Effects in Participatory Budgeting Decisions

Participatory budgeting is applied by an increasing number of municipalities and organizations. Citizens can decide over an institutional budget. The allocation mechanism can affect emotional arousal, which influences the choice evaluation in the decicion-making process. Building on the endowment effect, we conduct an experiment testing a novel participatory budgeting approach that includes an element of crowdfunding. We measure participants’ heart rate to determine emotional arousal. This is one of the first studies to investigate the arousal of participants in participatory budgeting procedures. Our findings suggest that institutions can engage their citizens in such a process without having to expect an endowment effect.