Decision-making processes can be influenced by situational factors, affecting risk taking. Background music, which is present in many everyday situations, has been shown to affect cognitive processes by influencing arousal and mood. The aim of the present study was to examine the possible effect of high- and low-arousal music on decision making in the context of financial investments, focusing on two tasks: a lottery-type task and a portfolio-diversification task. Participants were asked to make investment decisions while either high-tempo music, low-tempo music, or no music was played in the background. On the lottery-type task, low-tempo music led to more risky decisions (i.e., more investment in risky assets) than high-tempo or no music. On the portfolio-diversification task, low-tempo music led to more risky decisions (i.e., less diversification) than high-tempo music. Moreover, on both tasks, participants who subjectively perceived the music as helpful made riskier decisions. Results are discussed with regard to gender differences and previous findings.
Bibliographical noteFunding Information:
Authors’ names are in alphabetical order. We would like to thank the research authority at the School of Business Administration in the College of Management Academic Studies (COMAS), Israel for financial support.
© 2019 Elsevier B.V.
Copyright 2019 Elsevier B.V., All rights reserved.
- Background music
- Behavioral finance
- Experimental finance
- Risk preferences