NEUROSCIENCE
Endogenous steroids and financial risk taking on a London trading floor
,
,
*Department of Physiology, Development and Neuroscience, University of Cambridge, Cambridge CB2 3DY, United Kingdom;
Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom; and
Cambridge Center for Brain Repair, University of Cambridge, Cambridge CB2 0PY, United Kingdom
Edited by Bruce S. McEwen, The Rockefeller University, New York, NY, and approved November 6, 2007 (received for review May 1, 2007)
Abstract
Little is known about the role of the endocrine system in financial risk taking. Here, we report the findings of a study in which we sampled, under real working conditions, endogenous steroids from a group of male traders in the City of London. We found that a trader's morning testosterone level predicts his day's profitability. We also found that a trader's cortisol rises with both the variance of his trading results and the volatility of the market. Our results suggest that higher testosterone may contribute to economic return, whereas cortisol is increased by risk. Our results point to a further possibility: testosterone and cortisol are known to have cognitive and behavioral effects, so if the acutely elevated steroids we observed were to persist or increase as volatility rises, they may shift risk preferences and even affect a trader's ability to engage in rational choice.
cortisol | testosterone | reward | uncertainty | neuroeconomics
Author contributions: J.M.C. and J.H. designed research; J.M.C. performed research; J.M.C. and J.H. analyzed data; and J.M.C. and J.H. wrote the paper.
The authors declare no conflict of interest.
This article is a PNAS Direct Submission.
To whom correspondence may be addressed. E-mail: jmc98{at}cam.ac.uk or jh24{at}cam.ac.uk
© 2008 by The National Academy of Sciences of the USA
CiteULike 
Complore 
Connotea 
Del.icio.us 
Digg What's this?
