The Influence of Emotion on Trust1

The willingness of individuals to trust each other is fundamental to economic and political life. In this paper we investigate the affective basis of trust. We explore whether and how manipulations of emotion influence behavior in the trust game. We also provide the first clear evaluation of a common method for manipulating emotions, the Autobiographical Emotional Memory Task (AEMT), to see how well it performs on different emotions as well as its ability to target specific emotions. Our findings suggest that negative emotions can decrease trust, but only if those negative emotions produce low certainty appraisals. Anxiety, a low certainty emotion, has a negative impact on trust while Anger and Guilt, two emotions that differ in their control-appraisals but induce the same high level of certainty, appear to have no clear effect on trusting behavior. We also find that the AEMT is ineffective with positive emotions and is not nearly as targeted as previous studies assume. To rectify this later problem we conduct mediation analyses to evaluate the influence of AEMT on trust via the targeted emotion. Our estimation strategy is the first to properly conduct mediation analysis for an outcome variable that is censored.