Are risk preferences dynamic? Within-subject variation in risk-taking as a function of background music

Marja-Liisa Halko and Markku Kaustia

No 2012/09, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: 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.

Keywords: Risk Taking; Music; Preference Interaction (search for similar items in EconPapers)
JEL-codes: D81 G11 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:201209

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