Now it may sound like these men are using testosterone to compete in the workplace, keep themselves going like the Energizer bunny, but Bissoon insists this is a medical treatment. He says a few years ago, during the recession, he started seeing more men for testosterone therapy. And now new research is looking at how testosterone affects the way men think. Subjects were shown plots of the price sequence for two ‘stocks’ and had to decide how much to invest in each over a total of 80 trials. In the testosterone experiment, they were administered three treatments of 10 g percutaneous 1% testosterone gel (or placebo) over a 48 hour period, and tested one hour after the last application. Each subject was tested twice, once following hormone treatment and once following placebo. Amplitude and RAD are insensitive to the level of activity in the market, which is commonly higher during periods of market instability and particularly during bubbles43. This variable corresponds to deviations of prices from fundamental value and is defined as the sum, over a subject’s purchases above the fundamental value and sales below the fundamental value in the first period (see supplementary table 1b). A link in men between testosterone and socioeconomic position could therefore simply reflect an impact of health on both. First, we know that socioeconomic disadvantage is stressful, and chronic stress can lower testosterone. But none of these studies show definitively that testosterone influences these outcomes because there are other plausible explanations. The study suggests that -- despite the mythology surrounding testosterone -- it might be much less important than previously claimed. Both effects were moderated by genetic variants of MAOA (Wagels et al., 2017), a gene implicated in impulsivity and aggression (Dorfman et al., 2014). Direct action of corticoids has been implicated in the impairment of the frontal lobes by stress (McKlveen et al., 2013, 2016); this may include alterations in dopamine release, and hence the signaling of either reward or reward errors (Butts and Phillips, 2013). Each stage is potentially sensitive either directly to these steroids or indirectly to their action elsewhere in the brain. This also applies to the principal action of testosterone on sexual behavior or motivation, which, as we have seen, may influence financial risk-taking. However, higher testosterone was related to increased temporal discounting in males, though the opposite was recorded in women (Doi et al., 2015). Lower levels of cortisol predicted temporal discounting in males, but this was opposite in women (Takahashi et al., 2010). There have been both negative reports and positive ones for the association of lower digit ratios with increased risk-taking within both males and females (Branas-Garza et al., 2018) as well as with greater reflective consideration of decisions in both sexes (Bosch-Domènech et al., 2014). We explored other factors that might moderate the behavioural response to testosterone. Our evidence shows that increases in testosterone lead to greater optimism and risk taking. This effect operated partly through a change in price expectations, with testosterone inducing significantly more optimistic expectations about future price increases. Subjects invested larger amounts on the riskier stock after testosterone administration than after placebo. When we examined the relationship between testosterone and behaviour using the same tasks we found a slightly different picture. Dependent on the specific task employed, induced stress can confer adaptive55, or maladaptive adjustments in behaviour30. Excessive stress may impair individual performance, but provide corporate benefits in terms of heightened caution or inter-personal learning. Much of the information on the factors that guide decisions made under the more primeval conditions of conflict will also apply to the more modern situations of finance. In both, experience and temperament will contribute to the behavioral response to a current acute and risk-laden situation. Incidentally, although the hippocampus has high concentrations of glucocorticoid receptors (Gray et al., 2017), it has not, so far, been implicated in neural processes affecting risk appetite. It can only be surmised that testosterone, which has a similar action, may operate though the amygdala and its connections with the orbital frontal cortex. The amygdala has been implicated in both cognitive and emotional components of risk-taking, another example of the blurred boundary between them (Bhatt et al., 2012). The effect of testosterone on investment was no longer significant after controlling for price expectations, which suggests that increased optimism could be the mechanism through which testosterone affected investment behaviour. As in a real financial market, subjects were not informed about the price generating process or the change of state; the only information on the price process available to them was a graph plotting the evolution of prices in real time (see Fig. 3 and supplementary material). We therefore cannot exclude the possibility that testosterone has significant effects on trading behaviour when it becomes elevated. This evidence cannot be considered causal, since it relies solely on associations between differences in endogenous hormone levels and market behaviour. After collecting all the data, the researchers analyzed the choices made by the men in the testosterone group and compared them to the choices of those in the placebo group. To measure risk preferences, participants made a series of choices between a guaranteed amount of money and a lottery with uncertain outcomes. Half of the men were randomly assigned to self-administer an 11-milligram dose of testosterone gel through the nose, while the other half received an identical-looking placebo gel.
