Stress hormone rise linked to less risky financial decisions
People given cortisol chose safer options
Chronically high levels of the stress hormone cortisol make people play it safe financially, a new study suggests. The result has implications for the financial system: When markets reel, people may be less inclined to make the risky investments needed to stop the freefall.
In earlier work, John Coates of the University of Cambridge and a colleague reported that London traders experienced a 68 percent boost in daily cortisol during an eight-day spell of market instability. In the new study, participants took cortisol pills over eight days to get a similar boost . The researchers then asked participants choose between two lotteries, one risky and one safe. Compared with people who had received a placebo, people who got the cortisol were more likely to choose the safer bet, Coates and colleagues report February 18 in the Proceedings of the National Academy