Happiness signaling

The factors that determine the prices of goods and services are within the core inquiry ofeconomic science. Do consumer’s emotions affect seller’s selling prices? The current studyexplores this issue through six field studies. The first four studies focus on happiness,demonstrating for the first time that happiness signals affect the prices of products and services.Happy customers are offered to pay lower price for goods–cellphones and bicycles–and forrelated services. The results are relevant both in face-to-face and online interactions and inbetween—and within—subject designs, implying that extended real income is another objectivebenefit of individual happiness. Two additional experiments do not show the same effect whenother emotions–anger and disgust–are signaled by the consumer. We present a formal modelfor the positive happiness premium and discuss the welfare implications of our findings.