Saturday, July 4, 2015

The truth is in…

Two studies of the role of stress hormones in financial trading. One concluded that “the hormones testosterone and cortisol may destabilize financial markets by making traders take more risks, according to a study.” The other – that “high levels of the stress hormone cortisol may contribute to the risk aversion and 'irrational pessimism' found among bankers and fund managers during financial crises.”  What are we to make of such contrasting findings in “behavioral finance”? Perhaps, one way or another, allostatic overload will wreck financial speculation – which has become the lifeblood of Western civilization? Unless most trading is handed over to female recruits – since the second study also confirmed that women make slightly better decisions under conditions of chronic stress? As we were once told as teenage military conscripts, this is a prospect you can see only through a crooked tubino (its Bulgarian version, that is).