Group Membership Changes How Others’ Affect Informs Observers’ Valuation of Unseen Outcomes

Others’ affective reactions can be the only available information about how good an outcome might be, yet little is known about how people use them to inform their own valuation. Across three preregistered experiments, we tested how observers use others’ reactions to value unseen lottery outcomes, and whether social group membership changes this affect-based value inference. Participants observed facial reactions of “demonstrators” to hidden lottery outcomes, reported how good they believed the demonstrator felt about the outcome (inferred affect), and stated their incentive-compatible willingness to pay (WTP) for these lotteries. In Experiment 1 (N = 416), happy relative to neutral expressions increased both inferred affect and WTP, and inferred affect accounted for most of the valuation difference. Experiment 2 (N = 1,127; informed by piloting, N = 419) introduced group membership via political agreement. In-group demonstrators were inferred to feel slightly better, and happy expressions increased WTP more when they came from in-group than from out-group demonstrators. Experiment 3 (N = 1,461) replicated these findings and added angry expressions, which reduced WTP without significant group differences. Across Experiments 2 and 3, group differences in reported inferred affect partially accounted for the group differences in valuation. Our findings extend affect’s role as a social signal to economic valuation and show that social group membership changes how others’ reactions inform observers’ valuation of unseen outcomes. Affect may thus be one route by which preferences spread differently within identity-aligned groups.