Cortisol and testosterone increase financial risk taking and may destabilize markets

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Title: Cortisol and testosterone increase financial risk taking and may destabilize markets
Authors: Cueva, Carlos | Roberts, R. Edward | Spencer, Tom | Rani, Nisha | Tempest, Michelle | Tobler, Philippe N. | Herbert, Joe | Rustichini, Aldo
Research Group/s: Microeconomía Aplicada (GIMA)
Center, Department or Service: Universidad de Alicante. Departamento de Fundamentos del Análisis Económico
Keywords: Financial markets | Testosterone | Cortisol | Financial decision making | Instability
Knowledge Area: Fundamentos del Análisis Económico
Issue Date: 2-Jul-2015
Publisher: Nature Publishing Group
Citation: Cueva, C. et al. Cortisol and testosterone increase financial risk taking and may destabilize markets. Sci. Rep. 5, 11206; doi: 10.1038/srep11206 (2015)
Abstract: It is widely known that financial markets can become dangerously unstable, yet it is unclear why. Recent research has highlighted the possibility that endogenous hormones, in particular testosterone and cortisol, may critically influence traders’ financial decision making. Here we show that cortisol, a hormone that modulates the response to physical or psychological stress, predicts instability in financial markets. Specifically, we recorded salivary levels of cortisol and testosterone in people participating in an experimental asset market (N = 142) and found that individual and aggregate levels of endogenous cortisol predict subsequent risk-taking and price instability. We then administered either cortisol (single oral dose of 100 mg hydrocortisone, N = 34) or testosterone (three doses of 10 g transdermal 1% testosterone gel over 48 hours, N = 41) to young males before they played an asset trading game. We found that both cortisol and testosterone shifted investment towards riskier assets. Cortisol appears to affect risk preferences directly, whereas testosterone operates by inducing increased optimism about future price changes. Our results suggest that changes in both cortisol and testosterone could play a destabilizing role in financial markets through increased risk taking behaviour, acting via different behavioural pathways.
Sponsor: This work was supported by the Economic and Social Research Council (grant ES/G005230/1). CC was supported by the Spanish Ministerio de Economía y Competitividad (ECO2012-34928). PNT was supported by the Swiss National Science Foundation (PP00P1_128574 PP00P1_150739 and CRSII3_141965). RER was supported by the UK Medical Research Council (Mr/J004685/1).
ISSN: 2045-2322
DOI: 10.1038/srep11206
Language: eng
Type: info:eu-repo/semantics/article
Rights: This work is licensed under a Creative Commons Attribution 4.0 International License. The images or other third party material in this article are included in the article’s Creative Commons license, unless indicated otherwise in the credit line; if the material is not included under the Creative Commons license, users will need to obtain permission from the license holder to reproduce the material. To view a copy of this license, visit
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Appears in Collections:INV - GIMA - Artículos de Revistas

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