Friend or Foe: The Influence of Ambient Sound on Risk Perception

29 Pages Posted: 21 Jul 2019 Last revised: 24 Feb 2020

See all articles by Elise Payzan-LeNestour

Elise Payzan-LeNestour

University of New South Wales; Financial Research Network (FIRN)

Bernard Balleine

University of New South Wales (UNSW) - Decision Neuroscience Laboratory

James Doran

University of New South Wales

Gideon Nave

University of Pennsylvania - The Wharton School

Lionnel Pradier

UNSW Australia Business School

Date Written: February 23, 2020

Abstract

Research in the field of multisensory perception shows that what we hear can influence what we see. We hypothesize that this is also true for the perception of risk. We conduct three laboratory studies to test our hypothesis, using judgments of financial asset risk (“volatility”) as a testbed. We document findings consistent with the idea that the presence of ambient sound impacts the perception of risk and that an important element of this impact is a hardwired association between auditory volume and visual instability. We discuss how our findings suggest that the presence of ambient sound has mixed consequences for human performance in contexts of judgment and decision-making under uncertainty across domains (e.g., financial, medical, and military decision-making), and how they raise new questions for future research.

Keywords: Decision-making under uncertainty, Risk perception, Neuroeconomics, Laboratory experiments, Behavioral interventions

JEL Classification: C91, D83, D87, G02, G11

Suggested Citation

Payzan-LeNestour, Elise and Balleine, Bernard and Doran, James and Nave, Gideon and Pradier, Lionnel, Friend or Foe: The Influence of Ambient Sound on Risk Perception (February 23, 2020). Available at SSRN: https://ssrn.com/abstract=3422762 or http://dx.doi.org/10.2139/ssrn.3422762

Elise Payzan-LeNestour (Contact Author)

University of New South Wales ( email )

Australian School of Business
Sydney, NSW 2052
Australia

HOME PAGE: http://www.elisepayzan.com/

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Bernard Balleine

University of New South Wales (UNSW) - Decision Neuroscience Laboratory ( email )

Australia

James Doran

University of New South Wales ( email )

College Rd
Sydney, NSW 2052
Australia

Gideon Nave

University of Pennsylvania - The Wharton School ( email )

3730 Walnut St
JMHH Suite 700
Philadelphia, PA 19104-6365
United States

Lionnel Pradier

UNSW Australia Business School ( email )

Sydney, NSW 2052
Australia

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