Men and women: who are at greatest risk?

Risky decisions that are taken by men, sometimes lead to unexpected success, and sometimes to disastrous failures. That is the conclusion drawn by researchers studying the behavior of traders in the financial markets. Since this is partly explained by the high levels of testosterone in women, usually things work differently (including on the stock exchange).

Men and women: who are at greatest risk?

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It is known that testosterone increases the propensity for risk, but the level of this hormone and other unstable and may vary depending on the situation. For example, if a risky decision led to success, testosterone levels increase even more in the case of failure it decreases.

Thus, the constant advances further enhance the willingness to take risks (and this is confirmed by research conducted among stock traders), and this effect is more pronounced in men, as their level of testosterone stronger relation whatsoever to the reaction to the successes and failures in comparison with women.

Senior lecturer at the Economics Department of the University Leicester (UK) and Deputy Director of the Leicester financial institution Ledley Daniel (Daniel Ladley) and colleagues conducted a study in which researchers tried to simulate the effect of hormonal fluctuations in the body of traders in the financial markets. As expected, the results showed that the risks that lead to success, increased propensity to further risks of failure also have the opposite effect, and both of these effects are significantly more pronounced in men than in women. The researchers did not stop there and decided to estimate how many women traders affects the stability of the markets. On the one hand, increasing the number of women traders to increase the overall volatility - prices fluctuated frequently, the extent of these fluctuations were smaller. The number of sharp price fluctuations decrease, which is important for maintaining financial stability, since a large number of weak vibrations are considerably less dangerous than rare but sudden changes in price.

These models also show that on average, women traders earn more than men, although the bidders with the highest incomes in the mainly male. This is again explained the influence of hormones - most men at risk and lose money on it, but a very small number manage to "break the bank", constantly risking and winning.

"Although the results show that male traders, may yield performance of their female colleagues, financial firms are now arranged so that basically rewarded the best traders, and most dismissed, even if many of them are still profitable. It is important to note that, as experiments have shown, the "best" traders demonstrate such indicators are not because of the superiority of their skills, but only by luck - one success after another, further enhances their willingness to take risks and increase investment. The best traders women are less prone to this effect and, therefore, less likely to receive fabulous profits, but they are also much less likely to suffer losses. Thus, the predominance of men among the traders can be attributed to the influence of hormones. In order to achieve an equal gender balance among the participants of exchange tenders need to change the whole structure of the remuneration of staff in financial companies - no more rewarding for some major successes, but for the stability and consistency of the results ", - says Daniel Ledley. See. D. Ladley et al. "The Role of Hormones in Financial Markets", Social Science Research Network, March 2016.