J. Allbeck et al. (Eds.): IVA 2010, LNAI 6356, pp. 357–370, 2010. © Springer-Verlag Berlin Heidelberg 2010 The Influence of Emotions in Embodied Agents on Human Decision-Making * Celso M. de Melo 1 , Peter Carnevale 2 , and Jonathan Gratch 1 1 Institute for Creative Technologies, University of Southern California, 12015 Waterfront Drive, Building #4 Playa Vista, CA 90094-2536, USA demelo@usc.edu, gratch@ict.usc.edu 2 USC Marshall School of Business Los Angeles, CA 90089-0808, USA peter.carnevale@marshall.usc.edu Abstract. Acknowledging the social functions that emotions serve, there has been growing interest in the interpersonal effect of emotion in human decision making. Following the paradigm of experimental games from social psychology and experimental economics, we explore the interpersonal effect of emotions expressed by embodied agents on human decision making. The paper describes an experiment where participants play the iterated prisoner’s dilemma against two different agents that play the same strategy (tit-for-tat), but communicate different goal orientations (cooperative vs. individualistic) through their pat- terns of facial displays. The results show that participants are sensitive to differences in the facial displays and cooperate significantly more with the coop- erative agent. The data indicate that emotions in agents can influence human de- cision making and that the nature of the emotion, as opposed to mere presence, is crucial for these effects. We discuss the implications of the results for designing human-computer interfaces and understanding human-human interaction. Keywords: Emotion, Embodied Agents, Decision Making, Cooperation, Ex- perimental Games. 1 Introduction The expression of emotion can serve important social functions in humans [1, 2]. Anger can communicate to the receiver to cease its actions as they might be hindering the sender’s goals; shame can convey regret for actions that might have obstructed the receivers’ goals; happiness or sadness might convey a general positive or negative appraisal of the current situation; and so on. Complementing the focus on the in- trapersonal effects of emotion [3, 4] and acknowledging this social view of emotions, there is interest in the interpersonal effects of emotion on human decision making. * This work was sponsored by the Fundação para a Ciência e a Tecnologia (FCT) grant #SFRH-BD-39590-2007; and, the U.S. Army Research, Development, and Engineering Command and the National Science Foundation under grant #HS-0713603. The content does not necessarily reflect the position or the policy of the Government, and no official endorse- ment should be inferred.