Testosterone Plays the Market

A team of researchers of Ben-Gurion University of the Negev (BGU) determined that exaggerated risk-taking in financial and business endeavors is driven by… increased levels of testosterone.

Testosterone is the primary male sex hormone and an anabolic steroid. In men, testosterone plays a key role in the development of male reproductive tissues such as the testis and prostate, as well as promoting secondary sexual characteristics such as increased muscle and bone mass, and the growth of body hair. (Wikipedia.)

This phenomenon creates a state-of-mind where stock brokers feel their luck is unstoppable and things go their way no matter what.  The rise in testosterone level after a successful investment causes the individual loose all care, to take risks with abandon, which, in turn, creates stock market price bubbles.

Female stock brokers, research shows, seem to be largely unaffected, presumably due to lack of testosterone.

Stock market ‘bubbles’ can be caused by soaring testosterone levels among traders.

Makes you wonder, isn’t it? 

The effect is driven by the rise in testosterone level that occurs from a successful investment, which in turn causes the individual to take risks and create price bubbles.

It was also only found to affect performance among men, not women.

Stock market ‘bubbles’ can be caused by soaring testosterone levels among traders.

 

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