Are risk preferences dynamic? : Within-subject variation in risk-taking as a function of background music
This paper investigates whether preference interactions can explain why risk preferences change over time and across contexts. We conduct an experiment in which subjects accept or reject gambles involving real money gains and losses. We introduce within-subject variation by alternating subjectively liked music and disliked music in the background. We find that favourite music increases risk-taking, and disliked music suppresses risk-taking, compared to a baseline of no music. Several theories in psychology propose mechanisms by which mood affects risktaking, but none of them fully explain our results. The results are, however, consistent with preference complementarities that extend to risk preference.
| Author: | Marja Liisa Halko, Markku Kaustia |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-272526 |
| Series (Serial Number) | CFS working paper series (2012, 09) |
| Publisher: | CFS |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of first Publication: | 2012 |
| Publishing Institution: | Univ.-Bibliothek Frankfurt am Main |
| Tag: | Music; Preference Interaction; Risk Taking |
| Institutes: | Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 330 Wirtschaft |
| JEL-Classification: | D81 Criteria for Decision-Making under Risk and Uncertainty |
| G11 Portfolio Choice; Investment Decisions | |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Veröffentlichungsvertrag für Publikationen ohne Print on Demand |
