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...