IDEA #62

The biology of risk-taking


Two hormones – testosterone and cortisol – have a huge effect on how we work.

What you need to know

John Coates, a derivatives trader turned Cambridge University neuroscientist, was fascinated by the biological processes at work on his old hunting ground of the trading floor. He has identified two key hormones that have a huge impact on how we work: testosterone, which feeds our appetite for risk; and cortisol, which inhibits our appetite for risk.

In a 2005 study, Coates took saliva samples from 250 traders (all but three of whom were male) over a two-week period and tracked the outcomes of their trades. ...

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