Images and Investment: Experimental Evidence on the Effects of Visual Stimuli on Financial Decisions

Abstract

We conduct a pre-registered, incentivized online experiment to examine how emotion-evoking images influence investment decisions, using arousal and valence scores from the OASIS database. While a link is documented between images and emotions in other domains, we are first to develop a thorough experimental framework that allows to investigate this for financial decisions.  In investment brochures, images are often used for advertising of (sustainable, green) assets. Our approach of using valence-arousal scores and comparing images from different domains (nature, non-nature) can be extended to other decisions as well. We simulate a mutual fund investment environment with non-informative images, using three between-subjects treatments. Our results show that negative images significantly decrease investments compared to neutral ones, but positive images do not increase them. Our findings inform regulators striving for transparency in financial markets and investment providers about the impact of visual stimuli on financial decisions.

Keywords: Nature Images, Risk Taking, Sustainable Investing, Arousal, Valence, Experimental Finance

JEL Classification: G11, G41