The Bull of Wall Street: Experimental Analysis of Testosterone and Asset Trading

Amos Nadler (), Peiran Jiao, Cameron J. Johnson (), Veronika Alexander () and Paul J. Zak ()
Additional contact information
Amos Nadler: Ivey Business School, Western University, London, Ontario N6G 0N1, Canada
Cameron J. Johnson: Department of Economic Sciences and Center for Neuroeconomics Studies, Claremont Graduate University, Claremont, California 91711
Veronika Alexander: Behavioral Health Institute, Loma Linda University, Loma Linda, California 92350
Paul J. Zak: Department of Economic Sciences and Center for Neuroeconomics Studies, Claremont Graduate University, Claremont, California 91711

Management Science, 2019, vol. 64, issue 9, 4032-4051

Abstract: Growing evidence shows that biological factors affect individual financial decisions that could be reflected in financial markets. Testosterone, a chemical messenger especially influential in male physiology, has been shown to affect economic decision making and is taken as a performance enhancer among some financial professionals. This is the first experimental study to test how testosterone causally affects trading and prices. We exogenously elevated testosterone in male traders and tested testosterone’s effect both on their trading behavior in experimental asset markets and on the size and duration of asset price bubbles. Using both aggregated and individual trading data, we find that testosterone administration generated larger and longer-lasting bubbles by causing high bids and the slow incorporation of the asset’s fundamental value.

Keywords: asset trading; experimental markets; testosterone; neurofinance; bubbles (search for similar items in EconPapers)
Date: 2019
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https://doi.org/10.1287/mnsc.2017.2836 (application/pdf)

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Working Paper: The Bull of Wall Street: Experimental Analysis of Testosterone and Asset Trading (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:64:y:2018:i:9:p:4032-4051

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