Little is known about the role of the endocrine system in financial risk taking. Here, we report the findings of a study in which we sampled, under real working conditions, endogenous steroids from a group of male traders in the City of London. We found that a trader's morning testosterone level predicts his day's profitability. We also found that a trader's cortisol rises with both the variance of his trading results and the volatility of the market. Our results suggest that higher testosterone may contribute to economic return, whereas cortisol is increased by risk. Our results point to a further possibility: testosterone and cortisol are known to have cognitive and behavioral effects, so if the acutely elevated steroids we observed were to persist or increase as volatility rises, they may shift risk preferences and even affect a trader's ability to engage in rational choice.cortisol ͉ testosterone ͉ reward ͉ uncertainty ͉ neuroeconomics T estosterone, produced by the Leydig cells of the testes and in smaller amounts by the adrenal cortex, mediates sexual behavior and competitive encounters. It rises, for example, in athletes preparing for a competition and rises even further in the winning athlete, while falling in the losing one (1, 2). This androgenic priming of the winner can increase confidence and risk taking and improve chances of winning yet again, leading to a positive-feedback loop termed the ''winner effect'' (3, 4). Cortisol, produced by the adrenal cortex, plays a central role in the physiological and behavioral response to a physical challenge or psychological stressor. Cortisol is particularly sensitive to situations of uncontrollability, novelty, and uncertainty (5). Its wide-ranging effects include dampening the immune system; stimulating glucose metabolism; and altering mood, memory, and behavioral response to threatening circumstances (6-8). Because testosterone has been found to play a role in winning and losing, and cortisol has been found to play a role in responding to stress and uncertainty, we developed the hypothesis that these steroids would respond to financial risk taking. Specifically, we predicted that testosterone would rise on days when traders made an above-average gain in the markets, and cortisol would rise on days when traders were stressed by an above-average loss. Our data confirmed the first prediction but suggested that cortisol responds more to uncertainty of return than to loss.In designing our protocol, we assumed that traders would experience a large endocrine reaction only if the risks they were taking and the consequent profit and loss were large enough to matter to them; if, that is, the trading would meaningfully affect their income, reputation, or, in the worst case, chances of being fired. We therefore decided to conduct the study on a real trading floor rather than under laboratory conditions and to sample steroids while traders did their normal jobs (9). With permission from the managers of a midsized trading floor (Ϸ260 traders, of which 4 were female) in t...

Let G be a compact p-adic Lie group, with no element of order p, and having a closed normal subgroup H such that G/H is isomorphic to Z p . We prove the existence of a canonical Ore set S * of non-zero divisors in the Iwasawa algebra Λ(G) of G, which seems to be particularly relevant for arithmetic applications. Using localization with respect to S * , we are able to define a characteristic element for every finitely generated Λ(G)-module M which has the property that the quotient of M by its p-primary submodule is finitely generated over the Iwasawa algebra of H. We discuss the evaluation of this characteristic element at Artin representations of G, and its relation to the G-Euler characteristics of the twists of M by such representations. Finally, we illustrate the arithmetic applications of these ideas by formulating a precise version of the main conjecture of Iwasawa theory for an elliptic curve E over Q , without complex multiplication, over the field F generated by the coordinates of all its p-power division points; here p is a prime at least 5 where E has good ordinary reduction, and G is the Galois group of F over Q .

Prenatal androgens have important organizing effects on brain development and future behavior. The second-to-fourth digit length ratio (2D:4D) has been proposed as a marker of these prenatal androgen effects, a relatively longer fourth finger indicating higher prenatal androgen exposure. 2D:4D has been shown to predict success in highly competitive sports. Yet, little is known about the effects of prenatal androgens on an economically influential class of competitive risk taking-trading in the financial world. Here, we report the findings of a study conducted in the City of London in which we sampled 2D:4D from a group of male traders engaged in what is variously called ''noise'' or ''high-frequency'' trading. We found that 2D:4D predicted the traders' long-term profitability as well as the number of years they remained in the business. 2D:4D also predicted the sensitivity of their profitability to increases both in circulating testosterone and in market volatility. Our results suggest that prenatal androgens increase risk preferences and promote more rapid visuomotor scanning and physical reflexes. The success and longevity of traders exposed to high levels of prenatal androgens further suggests that financial markets may select for biological traits rather than rational expectations.2D:4D ͉ neuro-economics ͉ risk taking ͉ market selection ͉ testosterone

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Risk taking is central to human activity. Consequently, it lies at the focal point of behavioral sciences such as neuroscience, economics, and finance. Many influential models from these sciences assume that financial risk preferences form a stable trait. Is this assumption justified and, if not, what causes the appetite for risk to fluctuate? We have previously found that traders experience a sustained increase in the stress hormone cortisol when the amount of uncertainty, in the form of market volatility, increases. Here we ask whether these elevated cortisol levels shift risk preferences. Using a double-blind, placebo-controlled, cross-over protocol we raised cortisol levels in volunteers over 8 d to the same extent previously observed in traders. We then tested for the utility and probability weighting functions underlying their risk taking and found that participants became more risk-averse. We also observed that the weighting of probabilities became more distorted among men relative to women. These results suggest that risk preferences are highly dynamic. Specifically, the stress response calibrates risk taking to our circumstances, reducing it in times of prolonged uncertainty, such as a financial crisis. Physiology-induced shifts in risk preferences may thus be an underappreciated cause of market instability.