Subjects

A total of 34 healthy men aged 18–30 were recruited to take part in the cortisol study. Four did not return for the second week of testing resulting in a total usable sample size of 30 participants. One additional outlier who earned 8–9 times more than other participants in the second session of the trading task was excluded from the analysis (this participant later admitted to being an experienced gambler) resulting in a sample size of 29 subjects (mean age = 25.7 yrs, SD = 2.68).

41 healthy men aged 18–30 were recruited for the testosterone study, four of whom did not complete both testing sessions. We excluded one additional outlier who in the second session invested >5 SD above the mean of our participant sample in high variance stocks and nearly doubled the second largest investor. This resulted in a total usable sample size of 36 (mean age 22.3, SD = 2.86). Participants were recruited on campus at the University of Cambridge via volunteer lists and online advertisements.

Medical exclusion criteria

To minimize the risks of possible interactions with the administration of either hormone, a qualified clinician carried out all screening procedures, recording standard measures (blood pressure, height and weight) and remained available throughout the experiment for medical support. Exclusion criteria were a personal history of heart disease, high blood pressure, diabetes, breathing problems (including asthma), skin sensitivities (including eczema), endocrine or hormone disorders, eye disease (including glaucoma), prostate disorders, liver or kidney impairment, neurological or psychiatric problems (including alcoholism, depression, schizophrenia or bipolar disorder), epilepsy, family history of heart arrhythmia or sudden death syndrome, head injury, recent major surgery, smoking or recreational drug use. In the cortisol study participants were also screened using the Beck’s Depression Inventory (BDI) and the profile of mood questionnaire (PoM) for symptoms of depression. No participant exceeded rejection threshold scores on either test (14+ for BDI and 30+ for PoM).

Experimental procedure

The experiment employed a within-subjects, double-blind placebo-controlled balanced crossover design. Testing was divided into two sessions that took place at least one week apart, each lasting approximately 3 hours. In order to minimize differences in endogenous hormone levels due to diurnal variation, both sessions were conducted at the same time of the day for each participant. Due to unforeseen circumstances one participant in the testosterone study was tested in the morning of the first week and in the afternoon in the second session. The experiments were conducted at the Herchel Smith Building for Brain and Mind Sciences at the University of Cambridge.

Subjects were instructed not to eat or drink 30 minutes before each session. Once they arrived for testing and all screening checks had been passed they were asked to provide a baseline saliva sample.

Drug Administration

In the cortisol study, following the baseline saliva sample, participants were administered a single tablet containing 100 mg of hydrocortisone or a placebo. Behavioural testing began 1 hour after administration. This approach has previously been employed to elicit consistent increases in cortisol over this time period48. Three further saliva samples were then collected at hourly intervals.

In the testosterone study, participants were administered either 10 g of TestogelTM (1% testosterone gel) or a placebo of colourless hydroalcoholic gel which was applied to the shoulders. We chose a transdermal application method rather than via injection as this approach is less invasive and can be self-administered by the subjects at home. Although the time course of the effects of testosterone on behaviour in men are currently under research, pharmacokinetics of transdermal application have been investigated and are known to elevate testosterone levels for at least 12 hours following administration49,50,80. Furthermore, recent studies have reported significant changes in behaviour following testosterone loading periods of around 24 hours67,69. Each subject received a total of three testosterone or placebo doses prior to each experimental session: the first 48 hours before testing, the second 24 hours before testing (which the subject was given to apply at home) and the third one hour before the testing session. The participants confirmed that the gel they administered at home was applied at the same time of day as in the first session and were made aware that they would be asked about this at the behavioural session. Additional saliva samples were collected when participants returned for the experimental session prior to the third administered dose and after participating in the trading task.

The choice of treatment regimens was motivated by the findings of Coates & Herbert (2008) which showed that traders exhibited extended periods where testosterone levels were raised on consecutive days, in line with increases in profits. This association appears to mirror the winner effect, also observed in the animal literature, whereby victories in competition for mates or food have been associated with elevated testosterone levels and increased aggression18,19.

Based on these data, our hypothesis was that the effects of testosterone on economic decision making would become more prominent if endogenous levels were elevated over a longer period of time, rather than a short-term elevation. Although the timescale of the behavioural effects of testosterone has been well described in women81,82,83, in males there is currently comparatively little data on when the behavioural effects are maximal, particularly with respect to risk taking67,68,69. Therefore we used an administration procedure which would result in significant elevations of testosterone over a 48 hour period prior to testing in order to mimic the sustained elevation in testosterone associated with the winner effect and reported during traders’ winning streaks27.

The motivation for the cortisol administration scheme was different, as we wished to recreate the acute stress-related changes in cortisol that occur following market shocks or the release of important economic indicators such as US employment statistics. Although the dose is at the upper end of the range of doses used in the literature31,48,61, our aim was to model the behavioural response to major shocks in financial markets. The individuals who trade in these markets personally bear enormous financial responsibilities, such that large shocks in these markets can place them in extremely stressful situations. Our aim was to employ a dose at the upper end of the doses used in the literature in order to reflect the hormonal conditions likely to be present in trading floors during such events.

The timing of the behavioural measures with respect to the administrations reflects the best compromise solution we were able to achieve given the currently available information about the behavioural effects of administering testosterone in men67,68,69. We decided to standardise the experience of the participants across both experiments.

As behavioural effects have previously been reported 1 hour after cortisol administration31, we decided to match that profile following the final dose in the testosterone administration study.

Neither experimenter nor participants were aware of the order of administration at the time of testing in either experiment, which was previously randomized by the pharmaceuticals provider (Cardiff and Vale NHS Pharmacy, UK). The participants did not report any side-effects following administration of either drug or placebo in either experiment and did not perform significantly better than chance when asked to guess in which session they received the active substance for the cortisol (P > 0.46) or testosterone (P > 0.62) experiments (two-sided binomial test).

Salivary hormone analysis

Saliva specimens of 3 ml were collected by passive drool using 12 ml plastic reagent tubes (Sarstedt, UK) and immediately frozen at −80°C. Samples were analysed at the Salimetrics Centre of Excellence saliva laboratory in Cambridge (Salimetrics Europe) using a competitive immunoassay. Each assay was performed in duplicate, with inter- and intra-assay variations < 6%. Of the total number of samples collected (1,296), ~7% were excluded or could not be analysed due to either insufficient saliva volume, likely interference with the assay or exceeding the upper limit of sensitivity for the assay. Evidence from a recent study which employed a similar testosterone administration procedure and reported saliva concentrations above 1000 pg/ml50 demonstrates that this administration approach induces levels of circulating unbound testosterone which can exceed the range of standard assays.

For statistical purposes, individual salivary hormone data is log-transformed in order to adjust for the non-normality of the data. The data is then analysed using two-way repeated measures ANOVA. In the cortisol study, we found a significant time effect (F = 50.80; P < .0001), drug effect (F = 292.25; P < .0001) and drug-time interaction effect (F = 190.09; P < .0001). Further paired t-tests show a significant time effect under placebo only in the first hour (P < .0001) but not in subsequent sampling times (P > .2); a significant time effect in every hour under treatment (P < .01); and a significant treatment effect in every period following administration (P < .0001) but not before administration (P = .5). In the testosterone study, we found a significant time effect (F = 55.22; P < .0001), drug effect (F = 50.99; P < .0001) and drug-time interaction effect (F = 32.70; P < .0001). Further paired t-tests show no significant time effect under placebo (first 48 hours: P = .4; last 2 hours: P = .08); a significant time effect under treatment (first 48 hours: p < .0001; last 2 hours: P = .1); and a significant treatment effect 48 hr and 50 hr after administration (48 hr: P < .0001; 50 hr: P = .0001). We also found a significant treatment effect at 0 hr (P < .001), suggesting that the washout period of one week was insufficient to fully restore testosterone levels back to baseline. Indeed, under placebo, subjects in the testosterone-placebo condition had significantly higher 0 h testosterone than subjects in the placebo-testosterone condition (P = .02) whereas there was no significant difference between both groups at 0 h under testosterone (P = .14). To address this issue, we performed additional statistical tests detailed in Statistical Analysis below. In the market study, we performed repeated measures ANOVA tests with gender as between-subjects factor. For cortisol, we found a significant time effect (F = 90.40; P < .0001), no gender effect (F = .14; P = . 7) or gender-time interaction effect (F = .11; P = .7). Further paired t-tests show significant time effects at both intervals (P < .01). For testosterone, we found a significant time effect (F = 10.37; P < .01), gender effect (F = 108.38; P < .0001) and no significant gender-time interaction effect (F = .22; P = .6). Further t-tests show a significant time effect from 14:00 to 15:30 (P < .01) and a significant gender effect at all times (P < .0001).

2D4D digit ratio measurement

2D4D ratios were measured using a previously published methodology29. Briefly, to determine 2D4D we used a high resolution flatbed scanner to generate an image of the participants’ right-hand and measured digit length from the metacarpophalangeal crease to the finger tip. A handprint was acquired during both behavioural visits to provide an average measurement. The handprints for both sessions were measured digitally for 2D4D and the mean value taken.

Trading task

Subjects received paper instructions for the trading task and were asked to complete a 3-item questionnaire to test their understanding of the instructions. If they gave an incorrect answer, an explanation was provided and the question was asked again. In order to provide an estimate of confidence before trading, participants were asked to guess where they expected to rank within the group in terms of final trading profits. The task was programmed using Presentation software (Neurobehavioral Systems, Inc.) and presented on a 17inch CRT monitor.

In the trading task subjects were shown price plots of two “stocks” and had to decide how much to invest in each of them over a total of 80 trials. The price of both stocks was updated simultaneously at the end of every trial. During a trial, the subject: [1] chose a stock, [2] entered an investment amount for that stock, [3] entered an investment amount for the other stock, [4] entered a guess about next period’s price for the first stock and [5] entered a guess about next period’s price for the other stock. The participants were given a maximum of 5 seconds to make each decision, but could respond faster if they chose to. Hence, each trial could last at most 25 seconds.

A subject could invest any positive amount on either stock up to their current cash endowment; they could also “short-sell” any negative amount up to their current cash endowment. By short-selling, a subject received cash in advance for the sale of stocks they did not yet own and which had to be bought in the following period. Lastly, they could also invest zero. These actions could all be executed by entering a positive number, a negative number (both in steps of [2] or [3]), or “0”. At the end of each trial, the purchases or sales made by the subject were cleared so that the subject’s portfolio returned to zero stock holdings. The cash endowment in the next period depended on whether prices in each stock rose or fell and on whether the subject had invested or short-sold either stock. The profits or losses resulting from an investment (or short-sale) on the ith stock were given by:

where i is stock number, i∈{1,2}, t is the trial number, t∈{1,…,80}, Ii is amount invested in stock i, with Ii > 0 indicating purchases and Ii < 0 indicating short-sales. Hence, the total change in cash from one trial to the next was given by:

A positive investment in trial t−1 consisted of purchasing an amount of assets at price p t−1 and reselling these assets in trial t at price p t . A negative investment (in this case a short-sale) in trial t−1 consisted of committing to sell assets in trial t at price p t−1 . In the case of short-selling, the subject received the money from the short sale in trial t−1 and had to buy the assets at price p t at the end of trial t to restore his short position. Consequently, positive investments were profitable when the price of a stock increased and short-sales were profitable when its price dropped.

Subjects could not invest more than their current cash endowment; however, by short-selling, subjects could “borrow” additional cash. To minimize the risk of bankruptcy, we did not allow subjects to short-sell an amount larger than their cash holdings at the start of each trial. This meant that a subject could increase their cash available for investment on one of the stocks by at most 100% by first short-selling the other stock. Subjects started with an endowment of 1000 units of cash. The exchange rate was 100 units = 1 GBP.

The prices of both stocks followed two independent geometric random walks with drift. At any point in time, a stock could be in a high return or a low return state and in a high variance or a low variance state. Stocks stayed at a given return and variance state for 10 trials in a row. Each combination of states of both stocks occurred at least once, in random order. Subjects, however, were not informed about any aspect of the price generating process.

The most relevant combination of states, in terms of decision conflict, arose when one of the stocks was in the low return, low variance state and the other was in the high return, high variance state. For this reason, this combination of states occurred three times during a session, whereas every other combination of states occurred only once.

The specific equation used to generate the price process was:

where α ∈ {0.003,0.011}, depending on whether the stock was in a low return state or a high return state and 𝜖 t ~ U[a, b] with (a= – 0.04; b = 0.04) in low variance states and (a= – 0.08; b = 0.08) in high variance states.

Substituting p t in equation 3, we get:

Hence, the expected marginal return from investment was α t , whereas the expected marginal return from short-selling was −α t /(1 + α t ).

The money earned in this task was equal to the subject’s final cash balance at the end of trial 80. Subjects were also rewarded an additional sum proportional to their average price guessing accuracy. Price guesses were elicited at the end of every trial. Thus, at trial t subjects had to enter a guess about p t+1 for stock 1 and for stock 2.

Presentation

A picture of the task as seen by the participant is displayed in the instructions (see “Instructions: trading simulator” in the supplementary materials). Prices of each stock were plotted with the current price always at a fixed y-coordinate in the graph, so that price changes were represented by shifts in the trail of past prices. This was in order to ensure that plots could never go above or below the bounds of the screen, while maintaining a fixed scale in the graph. After the 10th trial, the current price remained at a fixed x-coordinate, so that from then on, only prices (p t ,…,p t−9 ) were displayed.

Statistical Analysis