The effect of the colour red on economic decision-making

• Main Authors: Lim, Chin Yann, Ong, Pearlyn Jia Xian
• Other Authors: He Tai-Sen
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2020
• Subjects: Social sciences::Economic development
• Online Access: https://hdl.handle.net/10356/144582
• Institution: Nanyang Technological University

Colours and decision-making are both prevalent factors in our daily life. There has been an increasing interest in the relationship between colours and human behaviour within the domain of colour psychology. Existing literature in this domain found that the colour red can convey meaningful information (i.e. red-danger association) as well as influence individuals’ cognitive levels (i.e. bad performance in achievement settings) and behaviour (i.e. avoidance motivation). Furthermore, interest in this area of research has started to gain traction within other disciplines (i.e. economics). Most studies examined the effects of the colour red on decision-making behaviour and hypothesised that the colour red would elicit risk-averse behaviour in individuals. However, there was a contrast in results among the existing studies. Also, there are no current or past studies conducted on how the colour red can affect time preferences. Consequently, our study aims to examine the effects of red colour (versus pale pink) and its mechanisms on time and risk preferences. To measure the outcomes, we conducted an online experimental study using the multiple price lists. Overall, our findings suggest that there is no significant effect of the colour red on subjects’ time and risk preferences. Keywords: Red, Risk Behaviour, Time Preference