A simple question to start with: What are your comfort surroundings when it comes to making investment decisions? Do you prefer silence, or do you usually have music playing in the background?
The thing is that you might not expect music in the background — from your phone, a café, or even an office playlist — to influence how you invest. But psychological research shows it can affect your risk-taking, focus, and overall decision-making process.
Basically, we're going to look at two studies that explore how music, and the emotions it triggers, can shape your investing behavior.
1. Music Tempo and Risk-Preference
A 2019 experimental study found that slow-paced music increased participants’ willingness to take risks and resulted in less diversified portfolios, compared to those who heard fast music or no music. Conversely, upbeat music promoted cautious decision-making and improved precision in complex tasks.
To put it simply:
- Slow music = riskier, less diversified choices
- Fast music = more caution, sharper focus
Meaning that it’s likely that upbeat tempos increase cognitive load and alertness, triggering a natural aversion to unnecessary risk.
2. Music and Mood Alter Trading Behavior
Another study in Hong Kong observed professional traders under different background music conditions. Researchers found:
- Music-induced emotions affected spending, risk evaluation, and negotiation behavior.
- Listening to favorite music made traders more impulsive and overconfident, leading to riskier decisions.
- Anxiety-inducing music made participants overly cautious, even when opportunities were favorable.
Why It Matters for P2P Investors
Even though most investment decisions are rational, subtle environmental cues like music can trigger emotional biases, often without us realizing:
- Slow music may nudge you toward high-risk assets or less diversified portfolios.
- Your favorite track might make you overly optimistic or impulsive, reducing caution when it matters.
- Fast tempo or unfamiliar music can heighten vigilance and conservative behavior, whether helpful or unnecessarily restrictive.
Interestingly enough, this effect aligns with the psychological concept of the “affect heuristic”, which shows how our emotions can distort the way we perceive risk and reward.
Investing in Real-Economy Business Loans? What You Should Know
As a P2P investor funding real business loans, environmental factors like music can unintentionally alter your judgment during strategy selection, risk assessment, or portfolio rebalancing. Consider these practical steps:
- Avoid ambient distractions when reviewing investment options.
- Pause trading or investing if you feel emotionally influenced.
- Create a consistent environment for investing — silence or neutral audio works best.
Final Thoughts
We often believe our decision-making is entirely conscious, analytical, and logical, but emotions are always present to remind us otherwise. The good news is that we’re capable enough of managing our emotional state, not going too wild with investment decisions, and even using emotions to our advantage.
When you know how emotions, including those caused by music, can influence your behavior, you can:
- Stick to your strategy more confidently.
- Recognize that emotional states impact behavior and avoid emotional overreactions.
- Create an environment that supports clarity and strategy, especially when considering long-term P2P commitments.
So, next time you’re investing, hit pause on the playlist, and make sure your environment supports your financial goals.
