Friend or Foe: The Influence of Ambient Sound on Risk Perception
29 Pages Posted: 21 Jul 2019 Last revised: 24 Feb 2020
Date Written: February 23, 2020
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: Suggested Citation