Real Men

Too much testosterone can cloud our financial judgment.

Back in June, The Economist discussed a study that proves it. In the experiment, subjects played a simple game in which pairs of players divided and received money from a central pot. One player would propose how to split the pot -- and the other player would decide whether to accept -- for instance, $35 for the splitter and, $5 for the decider. If the decider accepted, both took their cuts. If the decider refused, neither got any money.

An economically rational decider would always accept the offer, no matter how low, because any payoff is more than zero. In practice, something gets in the way, and deciders will sometimes rather take nothing at all than accept an offer considered too low.

Here's where it gets interesting. In this version of the experiment, the players' testosterone levels were checked, and those with higher levels of testosterone were more likely to reject the low-ball offers of money. According to The Economist, "The responders who rejected a low final offer had an average testosterone level more than 50% higher than the average of those who accepted. Five of the seven men with the highest testosterone levels in the study rejected a $5 ultimate offer, but only one of the 19 others made the same decision."

In short, too much testosterone got in the way of their making the most obvious, and profitable, financial decision.