A new study published the Imperial College of London points out that cortisol and testosterone might have a role in riskier decision-making in jobs which revolve around economic and commercial transaction.
Most of you are now probably thinking at the famous scene in the beginning of The Wolf of Wall Street, where Matthew McConaughey tells Leonardo DiCaprio that he’d be best jacking it off a lot in their business line. The movie may have been known for extravagance and going over the top a lot, but they might have actually nailed this part according to the research.
The research states that hormones which could be classified as natural steroids, including testosterone and cortisol, might influence men to take more risks and act in a more audacious manner.
This was found out after extensive tests performed by the researchers, who went as far as simulating the atmosphere and overall condition of a real life trading floor. 75 men between the age of 18 and 30 were then given the task to trade on a fictitious stock market, but not before they were all injected with different levels of cortisol and testosterone. The researchers then observed and compared results for each of them.
The results seemed quite conclusive – those who had higher levels of testosterone and cortisol started trading faster, with the average length between trades decreasing by several seconds, and also started to display a somewhat exuberant behavior. However, it was also observed that both types of hormones had different types of impact on their behavior.
For example, those who had their cortisol level artificially raised started taking incredibly wild and risky dangers with their trades, most of the time not even considering the consequences of failures and gambling on what normally would appear to be unsuccessful transactions.
However, those injected with testosterone did not display the same recklessness, although their decision making was still on the border between questionable and downright illogical. They didn’t change their personalities too much, but approached trading with a rising sense of optimism, which was completely unfounded in many cases.
The study takes on an interesting aspect of one of the most mentally-soliciting profession out there. Traders are usually needed to take in and process high amounts of information in very short time before making decisions, due to the amount of variables which determine stock prices and much more. It could offer an explanation for the sometimes unfounded erratic behavior they display when overevaluating stocks.
Image Source: The Telegraph