ZME Science
No Result
View All Result
ZME Science
No Result
View All Result
ZME Science

Home → Science → News

Sweeping hormones make stock brokers take riskier decisions

It's not just teenagers who let hormones get the best of them, stock brokers do it all the time, according to a new study. Only, in this case, the consequences might be far worse than a family meltdown: we're talking about global markets crashes.

Tibi PuiubyTibi Puiu
July 6, 2015 - Updated on July 15, 2015
in News, Psychology
A A
Share on FacebookShare on TwitterSubmit to Reddit

It’s not just teenagers who let hormones get the best of them, stock brokers do it all the time, according to a new study. Only, in this case, the consequences might be far worse than a family meltdown: we’re talking about global markets crashes.

stressed brokers
Image: Spline Doctors

The researchers, led by Carlos Cueva from the department of economics at the University of Alicante and Ed Roberts from Imperial College of London, simulated a trading floor with 142 participants, both male and female. The participants were asked to trade dividend-paying stock over 15 rounds of trading. During the whole time, cortisol and testosterone levels were measured.

Cortisol, also known as the “stress hormone”, is released by the adrenal gland in response to stressful physical and psychological situations. Cortisol (along with its partner epinephrine) is best known for its involvement in the “fight-or-flight” response and temporary increase in energy production, at the expense of processes that are not required for immediate survival. Here’s how this basic survival mechanism operates in a typical example:

1. An individual is faced with a stressor.

2. A complex hormonal cascade ensues, and the adrenals secrete cortisol.

3. Cortisol prepares the body for a fight-or-flight response by flooding it with glucose, supplying an immediate energy source to large muscles.

4. Cortisol inhibits insulin production in an attempt to prevent glucose from being stored, favoring its immediate use.

RelatedPosts

Italy’s Ecomafia: A Major Challenge of Environmental Justice
Solar panels on half the world’s roofs could meet its entire electricity demand
Chemical switch found in Alzheimer’s and stroke victims’ brains kills neurons
How bacteria control their size and remain uniform

5. Cortisol narrows the arteries while the epinephrine increases heart rate, both of which force blood to pump harder and faster.

6. The individual addresses and resolves the situation.

7. Hormone levels return to normal.

Testosterone is a vital male hormone that is responsible for the development and maintenance of male attributes. It also makes men aggressive and prone to risk taking.

The researchers found that high levels of cortisol corresponded with both higher trading volumes and greater variability in the stock’s price. This was only true for men. For women, this relationship wasn’t as clear.

To see whether or not the cortisol was merely an unrelated correlation or a causation, the researchers investigated the matter further with a new round of experiments. They split the male participants into two groups. In the first, 34 men were given either 100-milligram hydrocortisone pills or placebos. In the second, 41 of them were injected with testosterone or a placebo.

Compared with the placebo group, those who took the hydrocortisone pill invested about 70 percent more money in the high-risk stock. The testosterone test revealed similar results. Cortisol appears to affect risk directly, while testosterone appears to increase optimism about future price changes.

“Numerous reasons have been proposed to explain why financial markets undergo periods of instability. These include: debt accumulation, incorrect beliefs about earnings process, limits to arbitrage, asset incompleteness, herding, or momentum trading,” the authors write Scientific Reports. “Yet influential economists still recognize the key role played by the unpredictability of human motivation.”

“Overall, our work suggests that stability in financial markets might be improved by considering how social, environmental, and procedural factors such as the release of important financial information may impact the hormone levels of traders participating in those markets,” the researchers write, “and therefore could be of benefit to policymakers intent on developing more efficient institutions.”

Journal Reference: Carlos Cueva et al. Cortisol and testosterone increase financial risk taking and may destabilize markets. doi:10.1038/srep11206

ShareTweetShare
Tibi Puiu

Tibi Puiu

Related Posts

assyrian basorelief rock
Archaeology

Stunning 12-Ton Assyrian Relief Unearthed in Iraq Reveals King Legendary King

byMihai Andrei
2 days ago
Genetics

Scientists uncover anti-aging “glue” that naturally repairs damaged DNA

byMihai Andrei
2 days ago
Science

New Nanoparticle Vaccine Clears Pancreatic Cancer in Over Half of Preclinical Models

byMihai Andrei
3 days ago
Future

Your Brain Could Reveal a Deadly Heart Risk. AI Is Learning to Read the Signs

byMihai Andrei
3 days ago

Recent news

assyrian basorelief rock

Stunning 12-Ton Assyrian Relief Unearthed in Iraq Reveals King Legendary King

June 21, 2025

Scientists uncover anti-aging “glue” that naturally repairs damaged DNA

June 20, 2025

New Nanoparticle Vaccine Clears Pancreatic Cancer in Over Half of Preclinical Models

June 20, 2025
  • About
  • Advertise
  • Editorial Policy
  • Privacy Policy and Terms of Use
  • How we review products
  • Contact

© 2007-2025 ZME Science - Not exactly rocket science. All Rights Reserved.

No Result
View All Result
  • Science News
  • Environment
  • Health
  • Space
  • Future
  • Features
    • Natural Sciences
    • Physics
      • Matter and Energy
      • Quantum Mechanics
      • Thermodynamics
    • Chemistry
      • Periodic Table
      • Applied Chemistry
      • Materials
      • Physical Chemistry
    • Biology
      • Anatomy
      • Biochemistry
      • Ecology
      • Genetics
      • Microbiology
      • Plants and Fungi
    • Geology and Paleontology
      • Planet Earth
      • Earth Dynamics
      • Rocks and Minerals
      • Volcanoes
      • Dinosaurs
      • Fossils
    • Animals
      • Mammals
      • Birds
      • Fish
      • Amphibians
      • Reptiles
      • Invertebrates
      • Pets
      • Conservation
      • Animal facts
    • Climate and Weather
      • Climate change
      • Weather and atmosphere
    • Health
      • Drugs
      • Diseases and Conditions
      • Human Body
      • Mind and Brain
      • Food and Nutrition
      • Wellness
    • History and Humanities
      • Anthropology
      • Archaeology
      • History
      • Economics
      • People
      • Sociology
    • Space & Astronomy
      • The Solar System
      • Sun
      • The Moon
      • Planets
      • Asteroids, meteors & comets
      • Astronomy
      • Astrophysics
      • Cosmology
      • Exoplanets & Alien Life
      • Spaceflight and Exploration
    • Technology
      • Computer Science & IT
      • Engineering
      • Inventions
      • Sustainability
      • Renewable Energy
      • Green Living
    • Culture
    • Resources
  • Videos
  • Reviews
  • About Us
    • About
    • The Team
    • Advertise
    • Contribute
    • Editorial policy
    • Privacy Policy
    • Contact

© 2007-2025 ZME Science - Not exactly rocket science. All Rights Reserved.