Financial Speculations, Stress, and Gender: A Laboratory Experiment

In this paper we study the effects of acute stress on speculative behavior using a controlled laboratory experiment with 416 men and women. We employ a recently introduced measure that captures individual speculative behavior, the Speculation Elicitation Task, and an efficient stress-inducing procedure, the Trier Social Stress Test for Groups, and pay special attention to the gender-specific effects. Our design allows for a separation of the main channels behind the treatment effects. We observe strong gender differences: The treatment – stress-inducing – procedure increases men's willingness to speculate compared to control men, but decreases it by about the same amount for women. As we do not observe any role of the task-specific risk-preferences and attention, and only a little change in the strategic expectations on others' behavior and in beliefs, we conclude that the behavioral change is driven by the change in preferences, although in the opposite directions for both genders. The analysis of salivary cortisol and subjective mood shows that the subjects were under a considerable level of stress.

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