What is the effect of Testosterone on financial trading and prices?

IFREE Grant Recipients, Amos Nadler et al., wanted to study just that. Using male participants, the researchers divided them into two groups. One group received a placebo treatment and the other received a topical gel containing testosterone. The participants traded in a market experiment. The research, published in Management Science, shows that increasing testosterone in men increases bid prices, generates larger and longer-lasting bubbles, and slows the incorporation of fundamental value. This is the first experimental study to study how testosterone affects trading and prices. The research results have wide implications outside the laboratory and are significant to consider when discussing the stock market and other financial markets.

Read the paper online: The Bull of Wall Street: Experimental Analysis of Testosterone and Asset Trading

  • Amos Nadler, Ivey Business School, Western University, London, Ontario
  • Peiran Jiao, Department of Economics, University of Oxford
  • Cameron J. Johnson, Department of Economic Sciences and Center for Neuroeconomics Studies, Claremont Graduate University
  • Veronika Alexander, Behavioral Health Institute, Loma Linda University
  • Paul J. Zak, Department of Economic Sciences and Center for Neuroeconomics Studies, Claremont Graduate University

To learn more, please visit the IFREE Grants Page.