The relationship between the serotonin transporter gene, stress, risk-taking behaviour, herding and market volatility

The global financial system consists of a growing set of markets, instruments and institutions. Through human communication and computer algorithms, markets are becoming more and more interconnected and therefore susceptible to sudden changes in shared perceptions of risk. Recent financial crises, crashes and scandals suggest that the concept of ‘risk’ is much more multifaceted than previously theorised in Economics and Finance.

This research project involves two innovative ways to study risk-taking behaviour. First, we will use new camera technology that enables us to study heartbeat and stress in real-time. In both artificial and real financial market environments, and without the need to interrupt the subjects, we will investigate how humans perceive risk. More specifically, we will study how they behave in situations they (and others that influence them) view as risky. Second, it has been found that individualistic and collectivist behaviour is related to genetic variations, and that there are significant differences in the geographical distribution of the serotonin transporter gene expression (which is connected to feelings of anxiety and stress).We will, therefore, investigate whether there is a relationship between the serotonin transporter gene and risk-taking behaviour.