While baseline testosterone has recently been implicated in risk-taking in men, less is known about the effects of changing levels of testosterone on financial risk. Here we attempt to influence testosterone in men by having them win or lose money in a chance-based competition against another male opponent. We employ two treatments where we vary the amount of money at stake so that we can directly compare winners to losers who earn the same amount, thereby abstracting from income effects. We find that men who experience a greater increase in bioactive testosterone take on more risk, an association that remains when controlling for whether the participant won the competition. In fact, whether subjects won the competition did not predict future risk. These results suggest that testosterone change, and thus individual differences in testosterone reactivity, rather than the act of winning or losing, influence financial risk-taking.
Apicella, Coren, Anna Dreber and Johanna Möllerström (2014),
"Salivary Testosterone Change Following Monetary Wins and Losses Predicts Future Financial Risk-taking".