Cheery traders may encourage risk taking 07 April 2009 by Peter Aldhous Magazine issue 2702. Subscribe and save for similar stories, visit The Human Brain Topic Guide
WAS it just greed that prompted the risky financial decisions that triggered global economic meltdown, or could other factors have been at work?
Before rushing to condemn the traders and bankers responsible, consider this: perhaps they were in too good a mood. That's the intriguing implication of experiments showing that even a fleeting exposure to a smiling face makes people more likely to make risky investment decisions.
At the Cognitive Neuroscience Society meeting in San Francisco last week, graduate student Julie Hall of the University of Michigan in Ann Arbor described experiments in which 12 male and 12 female volunteers played a game in which they repeatedly had to choose between investing in a "safe" bond and two much riskier stocks.
For every round of the game, the bond paid out $3. One of the stocks paid out $5 half of the time, while the other lost $5 at the...
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